U.S. economic growthpicked up in the third quarter of 2026, driven by accelerated investment, resilient consumer spending, and an uptick in government expenditure, even as surging imports widened the goods trade deficit.
Real gross domestic product increased at a 3.4% annual rate over the last three months, according to the Commerce Department's advance estimate released Oct. 29. Like all GDP estimates, the department will revise it as more data becomes available. The initial reading came inhigher than forecasters' estimates. Economists polled by Reuters had forecast GDP rising at a 3.2% pace while the Federal Reserve Bank of Atlanta's GDPNow tracker forecasted 3.3% growth.
GDP measures the total value of goods and services produced by an economy.
Comparing current data against the prior quarter and previous year gives analysts a chance to gauge the overall health of the U.S. economy and its individual sectors.
The reading released Oct. 29 was also higher than the department’s latest estimate of 2.2% GDP growth in the second quarter of 2026 and represents the most rapid growth since the third quarter of 2025.
Compared to the second quarter, the 3.4% expansion over the last three months "primarily reflected an acceleration in investment and an upturn in government spending," the department said. Gains were partially offset by a downturn in exports, it added.
The day before the estimate's release, Federal Reserve Chair Kevin Warsh said U.S. economic activity was expanding at a "strong pace."
"Domestic spending has been resilient, productivity growth is strong, and capital investment robust," he told reporters after policymakers' October interest rate decision.
Although the Fed held off on another rate hike, Warsh also recommitted to delivering price stability as officials remain focused on inflation.
Ahead of their next rate decision in December, policymakers will review the department's Personal Consumption Expenditures Price Index, a measure of inflation the Fed has shown preference for in the past, which the department also released Oct. 29. It showed PCE inflation rose to 3.6% over the year in September, up from August's 3.4% pace.
With inflation still running hot, most traders are betting on a quarter-percentage-point increase to the federal funds rate in December, according toCME FedWatch. If policymakers follow through on that expectation, that would bring the benchmark for short-term interest rates to a range of 4% to 4.25%.
Reach Rachel Barber at rbarber@usatoday.com and follow her on X @rachelbarber_
This article originally appeared on USA TODAY: US GDP growth accelerated in third quarter, surpassing expectations
