U.S. Economy Grows 3.4% Ahead of Jobs Test and Expected Bank of England Decision
Key Facts
The U.S. economy grew at an annual rate of 3.4% in the third quarter of 2026, accelerating from 2.2% in the second quarter, according to the advance estimate released by the Bureau of Economic Analysis on October 29. The reading came in a week when the Federal Reserve held its target interest rate range at 3.75% to 4%, while reiterating that inflation remains elevated. Investors are watching the U.S. jobs report for October, due on November 6, as a near-term gauge of the economy’s trajectory and monetary policy. In Britain, the Bank of England’s decision is due on November 5, after inflation and wage data showed pressures that led markets to price in a rate increase broadly. These dates put strong U.S. growth data up against persistent inflation indicators and questions about central banks’ next moves.
The Bureau of Economic Analysis said the increase in output reflected gains in investment, consumer spending and government spending, partly offset by a decline in exports. Investment accelerated compared with the second quarter, while government spending turned higher after previously contributing negatively. Real final sales to private domestic purchasers rose at an annual rate of 4.9% in the third quarter, compared with 4.6% in the second quarter. These figures offer a picture of continued strength in domestic demand alongside growth in overall output. The second estimate of third-quarter GDP and corporate profits is due on November 25 at 8:30 a.m. Eastern time.
The Federal Reserve held the federal funds rate target range at 3.75% to 4% in its October 28 decision, after a 10-to-2 vote. Lisa Cook and Beth Hammack voted to raise the range by a quarter of a percentage point, while the Fed said economic activity was expanding at a strong pace and inflation remained elevated. The core personal consumption expenditures price index rose 0.3% in September, the same monthly increase recorded in August. The overall index rose 0.5% in September, after a 0.3% increase in August. The next personal income and outlays report, including October data, is due on November 25 at 8:30 a.m. Eastern time.
In Britain, the Monetary Policy Committee held interest rates at 3.75% at its September meeting by a 6-to-3 majority, while three members backed a quarter-point increase to 4%. Consumer price inflation was 3.1% in August, and Reuters said markets were pricing in an increase at the next meeting almost fully, driven by higher-than-expected September inflation and faster wage growth. The Bank of England decision is due on November 5, with the Bank Rate at 3.75% ahead of the meeting. In the United States, markets were pricing in an 80% chance of a Fed rate increase in December, according to Reuters on October 29. The Federal Reserve’s next meeting is on December 8 and 9.
The U.S. economy added 29,000 jobs in September, compared with an average monthly gain of 45,000 over the previous twelve months, according to the Bureau of Labor Statistics. Compensation costs for civilian workers also rose 0.8% in the three months ended in September; wages and salaries increased 0.7% and employee benefits rose 0.9%. The October jobs report is due on November 6 at 8:30 a.m. Eastern time. In trading on Friday, October 30, the S&P 500 fell 1.9%, and the yield on 10-year U.S. Treasury notes declined to 4.94% from 4.98% at Thursday’s close. Reuters said next week’s meetings could bring increases, including the Bank of England decision, after the Fed, European Central Bank and Bank of Japan held rates unchanged this week.