The U.S. economy grew at its fastest pace in a year. Inflation accelerated in September

According to preliminary estimates of U.S. gross domestic product (GDP), the U.S. economy grew by 3.4% on an annualized basis in the third quarter of 2026, according to data from the U.S. Bureau of Economic Analysis (BEA). These figures exceeded economists’ forecasts (3.1%) and significantly outpaced the previous growth rate of 2.2% in the second quarter, according to CNBC. Bloomberg notes that these results were driven by robust business investment and sustained consumer spending in the U.S. According to the agency, the U.S. economy posted its fastest growth of the year in the third quarter.

The world's largest economy continued to be fueled by robust business investment, largely driven by spending on artificial intelligence, according to Bloomberg. In fact, spending on equipment made the largest contribution to GDP growth in the third quarter since 2011, excluding the post-pandemic recovery period.

The report, the agency notes, marks the last major snapshot of the state of the U.S. economy ahead of next week’s midterm elections. The results will determine which party will control Congress during the final two years of Donald Trump’s presidential term.

At the same time, inflationary pressures persisted. Along with the U.S. GDP data, the BEA released figures for the Personal Consumption Expenditures (PCE) price index for September. Last month, it rose 3.6% year-over-year and 0.5% month-over-month (the highest reading since March, according to Bloomberg). Overall, the inflation data were largely in line with the consensus forecast of economists surveyed by FactSet, according to Morningstar—experts had expected figures of 3.7% and 0.5%, respectively. In August, the PCE growth rate was estimated at 3.4% year-over-year and 0.3% month-over-month.

At the same time, the September data for the Fed’s preferred core PCE index—which excludes volatile food and energy prices— were exactly in line with expectations—core PCE rose 0.3% month-over-month and 3.1% year-over-year last month. This reflects a slight acceleration compared with August, when the growth rates for this indicator were estimated at 0.2% and 3%, respectively.

Economists are closely monitoring signs that companies are passing on the costs of higher fuel prices to consumers, according to Morningstar. For regulators, this is a key issue in assessing how persistent inflationary pressures will be this year. Nevertheless, some economists believe that this inflation report will not have a major impact on U.S. monetary policy in the near term. “The August figures were very encouraging. Even if the new numbers turn out to be higher than expected, they will only partially offset this good news,” noted Christopher Hodge, chief U.S. economist at Natixis.

Hodg adds that the consumer and producer price indices released earlier this month had prepared experts for an acceleration in the PCE, and although inflation is the Fed’s top priority, it cannot be its sole focus, given the recent turmoil in credit markets. In his view, it would take something outside the consensus range (such as a 0.1% decline or a 0.5% increase) for the core PCE to significantly change the situation, he says. Hodge expects Fed officials to raise rates by a quarter point in December.

The day before—following the rate hike in September—the Fed decided to take a break and left the rate unchanged.

Futures on major U.S. stock indices continued to fall following the release of new macroeconomic data. They had already turned negative several hours earlier—after earnings reports from Alphabet and Microsoft reignited market doubts that multibillion-dollar investments in AI would yield sufficient returns. At the time of publication, S&P 500 futures were down 0.3%, Nasdaq 100 futures were down 0.94%, and Dow Jones futures were down 0.2%.

Traders have not changed their forecasts that the Fed will raise interest rates in December: according to data from the CME’s FedWatch tool, the markets expect this move with an 83% probability.

This article is being updated

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