The U.S. economy grew at a yearly rate of 3.4% in the third quarter of 2026, up from 2.2% in the second quarter, while inflation measured by the core PCE index stayed at 3.1% from a year earlier, the BEA reported Oct. 29.
The GDP number is an initial estimate for July through September. The agency said it would update the estimate when more complete data become available. Investment, consumer spending and government spending helped the economy grow.
Falling exports partly offset those gains, while imports also increased. Consumer spending rose at a yearly rate of 3.8%. Business investment strengthened.
Investment in equipment that processes information rose sharply amid growing demand for infrastructure related to AI. Housing investment declined 3.3%. High mortgage rates continued to hurt the sector.
Inflation remained a concern. The overall PCE price index rose 3.6% from a year earlier, above the Federal Reserve’s 2% goal. Core PCE, which excludes food and energy, was up 3.1% from a year earlier.
The overall index increased 0.5% in September from the previous month. Core PCE rose 0.3%. Together, the reports showed stronger output alongside continuing price pressures.
Policymakers must weigh this combination as they assess the economy and inflation.