US economy grew at 3.4% annualized rate in third quarter, above forecasts

US gross domestic product (GDP) grew at a 3.4% annualized rate in the third quarter of 2026. The figure comes from the advance estimate of the Commerce Department's Bureau of Economic Analysis (BEA), released on Thursday, according to the South China Morning Post and The Guardian.

Growth was faster than expected. Economists polled by Reuters had forecast 3.2%, with estimates ranging from 1% to 4.2%.

The reports attribute the growth to resilient consumer spending and business investment driven by artificial intelligence (AI). They say these factors more than offset the impact of higher oil prices linked to the conflict in the Middle East.

The reports also note a contrast with households' downbeat view of the economy. They say this view is reflected in President Donald Trump's record-low approval ratings.

The GDP passages in the South China Morning Post and The Guardian closely match Reuters wording and cite the same Reuters poll. They therefore appear to come from one reporting origin. The reports reviewed by Vocemundi do not quote the BEA release directly.

Inflation, spending and prices

According to The Guardian:

• The personal consumption expenditures (PCE) price index rose 0.5% in September. The annualized PCE inflation rate rose to 3.6%, from 3.4% in August.
• Core PCE inflation, which excludes food and energy, rose to an annualized 3.1%.
• The consumer price index, released earlier in October, showed annualized inflation rising from 3.4% in August to 3.7% in September.
• Consumer spending, more than two-thirds of the economy, grew at a 3.8% pace in July-September, the same rate as in the second quarter.
• Households have been saving less and drawing on savings to fund spending.
• Average gasoline prices remain above $4 a gallon, about $1 more than a year earlier.
• University of Michigan consumer sentiment is down 15% from February, before the start of the war with Iran.
• On Wednesday, the Federal Reserve left its benchmark rate in the 3.75%-4% range.

The Guardian reports that the data came less than a week before the midterm elections that will decide control of Congress. It says multiple polls show Mr Trump's economic approval rating has fallen, with voters citing gas and grocery prices. The reports do not identify these polls.

What each side says

The Federal Reserve said inflation "remains elevated", according to The Guardian. Fed Chair Kevin Warsh told reporters that "economic activity is expanding at a strong pace", the newspaper reported. He added: "while uncertainty remains, owing in part to geopolitical developments, domestic spending has been resilient."

Some Fed officials put the non-inflationary growth rate at about 2%. The Guardian says current growth is well above that level.

Unnamed economists cited by The Guardian expect the Fed to raise rates in December because inflation remains high. Some say AI spending dominates, so the GDP figure probably does not give a true picture of the economy. Others anticipate slower consumer spending, given high gasoline prices and the war with Iran.

The reports do not give second-quarter GDP growth, or show how much growth came from AI investment versus consumer spending.

Analysis

The figures present a mixed picture. Output grew faster than forecast, but the inflation measures reported by The Guardian moved higher, and households appear less confident. If inflation stays above target, the Fed may weigh tighter policy, as some economists expect. A slowdown in consumer spending, which some economists anticipate, could also change that outlook. The role of AI investment is a key uncertainty. Its scale, and how long it lasts, may shape how durable the growth proves. The data's political effect before the midterm elections is unclear. Voters' views of the economy appear to differ from the headline growth figures.

Produced by the Vocemundi newsroom with AI assistance.