U.S. Q3 Real GDP Growth of 3.4% Exceeds Expectations; Domestic Demand Remains Strong

Preliminary data released Thursday by the U.S. Bureau of Economic Analysis (BEA) showed that U.S. real gross domestic product (GDP) grew at an annualized rate of 3.4% in the third quarter of 2026, markedly accelerating from 2.2% in the second quarter and also above the market expectation of 3.2%, indicating a rebound in economic momentum. Domestic demand remains strong, exports a drag By component, third-quarter economic growth came mainly from increases in investment, consumer spending and government spending, partly offset by a decline in exports; imports rose, and imports are a subtractive item in GDP calculations. A key gauge of domestic demandreal final sales to domestic private purchasers (the sum of consumer spending and private fixed investment)rose 4.9%, up from 4.6% in the second quarter, indicating that private-sector demand remains resilient. Specifically, investment growth mainly reflected increases in private inventory investment and equipment spending, with equipment growth led by information-processing equipment (mainly computers and peripheral equipment). Within consumption growth, services were driven by health care (mainly hospitals and outpatient services) and food services and accommodations, while goods were driven by prescription drugs and other nondurable goods. Government spending growth came mainly from an increase in federal nondefense consumption spending, related to a smaller reduction in strategic petroleum reserve sales than in the second quarter; however, because oil sold by the government is counted in other components of GDP, this item has no direct impact on total GDP. The decline in exports was mainly due to a decrease in petroleum and related products, while import growth came mainly from capital goods excluding autos. Inflationary pressure eased markedly On prices, the domestic purchase price index rose 3.0%, below the 5.6% in the second quarter; the personal consumption expenditures (PCE) price index rose 2.1%, below the 5.0% in the second quarter; and the core PCE price index, excluding food and energy, rose 2.5%, below the 3.3% in the second quarter. The figures released this time are advance estimates. The BEA will release the second estimate of third-quarter GDP and corporate profits data on November 25, 2026, at which point these figures will be revised.