U.S. Economy Grew at 3.4% Pace in Third Quarter as Investment Picked Up

The U.S. economy grew at a 3.4% annual rate in the third quarter of 2026, picking up from 2.2% in the second quarter, as business investment, consumer spending and government outlays all rose, the Bureau of Economic Analysis reported Thursday in its advance estimate.

The gain covers July through September and works out to 0.8% at a quarterly rate, according to the BEA. A drop in exports partly offset the increases, and imports, which are subtracted when calculating GDP, rose.

What drove the pickup

The BEA said the acceleration from the second quarter mainly reflected faster growth in investment and an upturn in government spending, partly offset by a downturn in exports. Imports grew more than they did in the spring.

Investment rose mainly on private inventory building and equipment. Wholesale trade and manufacturing led the inventory gain, while information processing equipment, mainly computers and peripheral equipment, led equipment spending, the agency said.

Consumers spent more on both services and goods. Health care, mainly hospitals and outpatient services, led services, followed by food services and accommodations. Within goods, the increase was led by other nondurable goods, mainly prescription drugs.

Government and trade

The rise in government spending was more than accounted for by federal outlays, led by nondefense consumption. The BEA said that pattern mainly reflected smaller sales of crude oil from the Strategic Petroleum Reserve than in the second quarter; such sales are deducted from government spending in the national accounts and have no direct effect on GDP.

Exports fell, led by petroleum and related products, while capital goods other than autos were the largest contributor to imports.

Inflation gauges slowed

Price measures in the report slowed from the second quarter. The personal consumption expenditures price index rose at a 2.1% annual rate, down from 5.0%. Excluding food and energy, it rose 2.5%, compared with 3.3%.

The price index for gross domestic purchases increased 3.0%, after 5.6% in the second quarter, the BEA said.

By the numbers

• Real GDP: up 3.4% annualized (Q2: 2.2%)
• Current-dollar GDP: up 5.6%
• Real final sales to private domestic purchasers: up 4.9% (Q2: 4.6%)
• PCE price index: up 2.1%; core up 2.5%
• Gross domestic purchases prices: up 3.0%

Real final sales to private domestic purchasers, the sum of consumer spending and private fixed investment, grew 4.9%, up from 4.6% in the prior quarter.

Thursday's numbers will be superseded by the next release. The BEA's second estimate of third-quarter GDP, along with corporate profits, is scheduled for Nov. 25, 2026, at 8:30 a.m. EST.

Sources

1. U.S. Bureau of Economic Analysis, "Gross Domestic Product, 3rd Quarter 2026 (Advance Estimate)," released Oct. 29, 2026

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