The full reportThe full report

Summary

On Thursday, October 29, 2026, the Bureau of Economic Analysis (BEA), a statistics agency in the Commerce Department, published two reports. The first estimate of third-quarter growth says the U.S. economy grew at a 3.4 percent annual rate from July through September, up from 2.2 percent in the second quarter, with consumer spending and business investment doing most of the lifting. The second report says the personal consumption expenditures (PCE) price index, the inflation measure the Federal Reserve uses for its 2 percent goal, was 3.6 percent higher in September than a year earlier. The figures came a day after the Fed held interest rates steady and five days before the midterm elections. The growth number is a first estimate and will be revised twice.

What happened

The BEA's advance estimate says real gross domestic product (GDP), the value of all goods and services the country produces, adjusted for inflation, "increased at an annual rate of 3.4 percent in the third quarter of 2026." The bureau said the contributors were "increases in investment, consumer spending, and government spending that were partly offset by a decrease in exports." The investment increase came mainly from businesses adding to their inventories and buying equipment, led by computers; consumer spending rose for both services, led by health care, and goods (BEA, GDP). CNN reported that business investment grew at a 12.7 percent annual pace, up from 9 percent, as companies built "AI-related infrastructure," that consumer spending grew at a 3.8 percent pace, and that exports fell 5.7 percent (CNN).

Growth beat forecasts. CNN put economists' projection at 3.0 percent (CNN); Fox Business cited a 3.2 percent estimate from economists polled by LSEG, a financial data company (Fox Business).

In the separate monthly report on personal income and spending, the BEA said the PCE price index rose 0.5 percent from August to September and 3.6 percent from September 2025. Leaving out food and energy, whose prices swing more, the index rose 0.3 percent on the month and 3.1 percent on the year (BEA, personal income and outlays). The yearly rate was up from 3.4 percent in August, and core inflation from 3.0 percent (CNN). Both figures matched economists' expectations (Fox Business). AFP reported that the prices of energy goods and services were up 21.3 percent over the year (AFP, via This Is Beirut).

The same report showed household spending rising 0.5 percent in September before adjusting for prices and staying flat after adjusting. Income after taxes, adjusted for prices, fell 0.3 percent, and the saving rate was 3.8 percent (BEA, personal income and outlays), the lowest in nearly four years, according to CNN (CNN).

What "annual rate" means, and how the PCE index differs from the CPI

Annual rate. The 3.4 percent is not how much the economy grew in the three months, and it is not the change from a year ago. It is the quarter's growth stretched to a full year: the BEA says an annual rate "shows what the percent change would be if the quarterly rate continued for four quarters," and it is computed "by compounding the quarterly rate for four quarters." The bureau publishes it this way so a quarter can be compared easily with a year (BEA FAQ). For the quarter itself, the BEA puts real GDP growth at 0.8 percent (BEA, GDP). Growth of a little over 0.8 percent a quarter, repeated four times, adds up to 3.4 percent.

Monthly figures, like the 0.5 percent rise in prices from August to September, are not stretched this way; the BEA reports them at monthly rates because annualizing would exaggerate month-to-month swings (BEA FAQ). The GDP report also lists a PCE price figure of 2.1 percent for the third quarter. That is the change from the second quarter at an annual rate, a different measure from the 3.6 percent change over twelve months (BEA, GDP).

PCE versus CPI. Two government price measures track inflation for consumers. The Consumer Price Index (CPI) comes from the Bureau of Labor Statistics in the Labor Department; the PCE price index comes from the BEA. The biggest difference is what each counts. The CPI measures what households pay out of their own pockets. The PCE index measures spending "by and on behalf of" households, including nonprofit groups that serve them, so it covers more than what people pay themselves. The two also weigh items differently (housing, for example, carries more weight in the CPI) and use different formulas (BEA FAQ). The Fed's policymaking committee sets its 2 percent inflation goal "as measured by the annual change in the price index for personal consumption expenditures" (Federal Reserve). For September, the CPI was up 3.7 percent from a year earlier, according to the Bureau of Labor Statistics, as quoted by Fox Business (Fox Business, October 14), against 3.6 percent for the PCE index.

How we got here

• July 30, 2026: The BEA's first estimate put second-quarter growth at a 1.5 percent annual rate, after 2.1 percent in the first quarter (BEA). The BEA now puts second-quarter growth at 2.2 percent (BEA, GDP).
• September 16, 2026: The Federal Open Market Committee, the Fed's rate-setting body, voted to raise its benchmark rate by a quarter point, to a range of 3.75 to 4 percent; its statement records no dissents (Federal Reserve). It was the Fed's first increase in three years (CNN).
• October 14, 2026: The Bureau of Labor Statistics reported the CPI up 0.6 percent in September and 3.7 percent over twelve months (Fox Business).
• October 28, 2026: The committee held the rate at 3.75 to 4 percent. It said "economic activity is expanding at a strong pace" and "inflation remains elevated." Two members, Lisa D. Cook and Beth M. Hammack, voted against, preferring a quarter-point increase (Federal Reserve).
• October 29, 2026: The BEA released the third-quarter GDP estimate and the September income and spending report at 8:30 a.m. Eastern (BEA, GDP; BEA, personal income and outlays).

What people involved say

Economists. Heather Long, chief economist at Navy Federal Credit Union, said the economy was "on steroids right now" but that high inflation was its "Achilles heel," and that "the AI boom is adding almost a full percentage point to growth." Gregory Daco, chief economist at EY-Parthenon, said consumers "are increasingly stretching their budgets to afford pricier goods and services" (AFP, via This Is Beirut). Elizabeth Renter, lead economist at Life360, said the consumer is "really holding the economy aloft," but "that's not uniform across households." Olu Sonola, head of U.S. economics at Fitch Ratings, said: "The Fed is tightening the screws, but the economy has yet to get the memo. If the Fed needed another reason to hike in December, this report just gave it one" (CNN). James McCann, senior economist at Edward Jones, said "the economy looks in good shape," though he expected "some headwinds" late in the year "as oil prices spike and financial conditions tighten" (Fox Business).

The Federal Reserve. The Fed's statement the day before said inflation "remains elevated" and that more information "will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal" (Federal Reserve). AFP reported that Fed Chair Kevin Warsh called current inflation "too high" but cautioned against moving too quickly (AFP, via This Is Beirut).

Republicans. The White House said the growth shows that "President Donald J. Trump's America First agenda is delivering as promised," that "Businesses are investing big in America," and that consumers "remain resilient" (White House). Rep. Jason Smith of Missouri, the Republican chairman of the House Ways and Means Committee, said the reports show the Republican plan "to create jobs, make life more affordable, and create an economy that gives opportunity to hardworking Americans is making progress." He said Democrats "unleashed a $10 trillion spending spree that ignited the cost-of-living crisis, the effects of which are still being felt today" (Ways and Means Committee).

Democrats. Rep. Brendan Boyle of Pennsylvania, the top Democrat on the House Budget Committee, said the report "confirms what working families already know: inflation is too high, and President Trump is to blame," and that people are struggling "because of Trump's tariff taxes, his health care cuts, and his disastrous Iran war" (House Budget Committee Democrats). Sen. Elizabeth Warren of Massachusetts said: "Today's data confirms families paid more in September for gasoline, housing, and health care," and "Trump's failed agenda is driving up costs and eating into Americans' paychecks" (AFP, via This Is Beirut).

What happens next

• November 3, 2026: The midterm elections, in which control of both houses of Congress is at stake (AFP, via This Is Beirut).
• November 25, 2026: The BEA publishes its second estimate of third-quarter GDP and the October income and spending report, with the next PCE inflation reading (BEA, GDP; BEA, personal income and outlays). A third estimate follows (Fox Business).
• December 8–9, 2026: The Fed's next rate meeting (Federal Reserve). Fox Business reported that the CME FedWatch tool, which reads futures prices, put the chance of a quarter-point increase there at 79.6 percent on October 29 (Fox Business).

How it was covered

12 of the 15 outlets on our panel covered it: 3 of 5 on the left, 4 of 5 in the center and 5 of 5 on the right (checked October 29, 2026). The Reel showed CNN's headline, "Last snapshot of the US economy before midterms shows stronger growth but higher inflation." Reuters led with "Robust consumer spending, AI-related investment power US economy in third quarter," and Fox Business with "Fed's preferred inflation gauge rose in September as third-quarter GDP beats expectations." We did not find coverage from HuffPost, MS NOW or Newsweek. Every outlet's headline, link and date is on the [story page](/stories/2026-10-29-economy-gdp-inflation/#coverage). [How we rate outlets and count coverage](/method/).

Sources

The [story page](/stories/2026-10-29-economy-gdp-inflation/#sources) lists the main sources; every other source is linked in the text above.

Corrections

None as of October 29, 2026. See the [corrections log](/stories/2026-10-29-economy-gdp-inflation/#corrections).