Key Highlights

  • Real GDP grew at a 3.4% annual rate in the third quarter, up from 2.2% and above the 3.2% forecast.
  • Investment drove the acceleration, with equipment led by computers and peripheral equipment and inventories adding 1.61 percentage points to growth.
  • Real final sales to private domestic purchasers rose 4.9%, compared with 4.6% in the second quarter.
  • The PCE price index rose at a 2.1% rate, down from 5.0%, while core PCE prices rose 2.5%.

Growth Accelerates in the Third Quarter

The US economy expanded at an annual rate of 3.4% in the third quarter of 2026, according to the advance estimate from the Bureau of Economic Analysis (BEA). That compares with 2.2% in the second quarter and with a forecast of 3.2%. Market data providers describe it as the fastest pace in a year. At a quarterly rate, the BEA put growth at 0.8%.

In current dollars, GDP rose at a 5.6% annual rate. The BEA attributed the acceleration from the second quarter primarily to faster investment and to an upturn in government spending, partly offset by a downturn in exports. Imports, which are subtracted in the GDP calculation, increased more than in the second quarter.

Investment Takes the Lead

Investment was the largest source of the acceleration. Detailed tables show private domestic investment growing at a 19.4% rate, against 4.6% in the second quarter. The BEA said the increase primarily reflected private inventory investment and equipment.

Within inventories, the largest contributors were wholesale trade and manufacturing, both led by nondurable goods industries, based on Census Bureau inventory data. Inventories added 1.61 percentage points to growth.

Equipment investment rose 20.9%, compared with 13.4% in the second quarter, led by information processing equipment, mainly computers and peripheral equipment. The BEA based that estimate on import data and on the Census Bureau advance economic indicators report for September. Market data providers link the strength to investment in artificial intelligence. Intellectual property products rose 8.4%, against 9.2%, and structures increased 5.4%, up from 0.1%. Residential investment contracted 3.3% after a 2.8% gain.

Consumers Keep Spending

Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 4.9% in the third quarter, compared with 4.6% in the second. Personal consumption grew 3.8%, the same pace as the previous quarter, with goods up 3.0% against 4.5% and services up 4.1% against 3.4%.

The BEA said consumer spending reflected gains in both services and goods. In services, the increase was led by health care, mainly hospitals and outpatient services, and by food services and accommodations. In goods, the increase was led by other nondurable goods, mainly prescription drugs.

Government and the Oil Reserve

Government spending rose 5.3% after a 0.1% decline in the second quarter. The BEA said the increase was more than accounted for by federal spending, led by nondefense consumption expenditures.

The pattern primarily reflected sales of crude oil from the Strategic Petroleum Reserve. In the national accounts, such sales are deducted from government consumption expenditures. Sales were smaller in the third quarter than in the second, which raised measured consumption expenditures. The BEA noted that because oil sold by the government appears as an increase in other components of GDP, there is no direct effect on GDP.

Trade Subtracts

Net trade was a drag. Exports decreased, primarily reflecting lower goods exports led by petroleum and related products. Detailed tables show exports shrinking 5.7% after a 5.0% increase in the second quarter. Imports increased 19.7%, compared with 12.6% previously, with capital goods other than automotive the largest contributor, according to the BEA. Because imports are subtracted in the GDP calculation, the increase weighed on the headline even though capital goods purchases also feed equipment investment, which was one of the strongest components.

Prices Cool From the Second Quarter

The price index for gross domestic purchases increased 3.0% in the third quarter, compared with 5.6% in the second. The PCE price index rose 2.1%, compared with 5.0%, and the index excluding food and energy rose 2.5%, compared with 3.3%. Separate monthly data released the same morning showed September PCE prices up 0.5% on the month and 3.6% from a year earlier.

Monthly Data Released Alongside

The GDP report arrived with the September personal income and outlays release. That report showed personal consumption expenditures up 0.5% in September, below the 0.6% forecast, while real spending was unchanged. Personal income rose 0.2%, real disposable income fell 0.3%, and the personal saving rate declined to 3.8% from 4.0%. Initial jobless claims were 194,000 in the week ending October 24, below the 199,000 forecast.

The BEA presents changes in quarterly series at annual rates unless otherwise specified, so the 3.4% figure compares with a quarterly rate of 0.8%. The agency also publishes a key source data and assumptions table, which shows the information behind the third quarter estimate, and the related tables in its interactive data application carry the full component detail.

Markers to Follow

The BEA is scheduled to release the second estimate of third quarter GDP, along with corporate profits, on November 25, 2026, at 8:30 a.m. EST. The advance estimate rests on incomplete source data and is subject to revision. Items on the calendar include inventories, equipment investment, the trade balance, and the treatment of Strategic Petroleum Reserve sales.