US GDP grew 3.4% in the third quarter as PCE prices slowed to 2.1%
Victoria Shinder2 min readThe US economy picked up speed in the summer. Real gross domestic product rose at a seasonally adjusted annual rate of 3.4% in the third quarter of 2026, up from 2.2% in the second, according to the Bureau of Economic Analysis's advance estimate released on 29 October. At a quarterly rate, the increase was 0.8%.
The BEA attributes the growth to higher investment, consumer spending and government spending, partly offset by lower exports, while imports, which are subtracted, rose. Investment was led by private inventories, chiefly in wholesale trade and manufacturing, and by equipment, especially computers and peripherals. Within consumer spending, services rose most in health care and in food services and accommodation, and goods in prescription drugs. Government spending was more than accounted for by the federal government, led by nondefense consumption, which the BEA links in part to sales of crude oil from the Strategic Petroleum Reserve.
Real final sales to private domestic purchasers, the sum of consumer spending and private fixed investment and a measure of underlying demand, grew 4.9%, after 4.6% in the second quarter.
Price growth slowed sharply. The PCE price index rose at an annual rate of 2.1%, after 5.0% in the second quarter, and excluding food and energy it rose 2.5%, after 3.3%. The price index for gross domestic purchases rose 3.0%, after 5.6%.
The second estimate, with corporate profits, is due on 25 November.
What it means
The release came the day after the Federal Reserve held rates with two dissents in favour of a hike. Strong private demand argues for caution; the slowdown in quarterly price growth argues the other way, though monthly data for September will show whether it held at the end of the quarter. Inventory building, which tends to reverse, accounts for part of the headline, so the 4.9% private demand figure is the better guide.