US GDP Q3 2026: Economy Grows 3.4%, Beating Forecasts

The US economy grew at its fastest pace in a year in the third quarter. The Bureau of Economic Analysis (BEA) published its advance estimate on 29 October, putting real GDP growth at 3.4% on an annualised basis. That was above the 3.2% consensus estimate.

The report also contained the latest reading on prices. The PCE Price Index, one of the Federal Reserve's preferred inflation gauges, rose 2.1% on the quarter. The core measure, which strips out food and energy, rose 2.5%.

Gross Domestic Product measures the total value of goods and services produced in the economy, adjusted for inflation. We explain the measure in What Is GDP?

The 3.4% figure is an annualised quarterly rate. It means the economy grew at a pace that, if sustained for a full year, would amount to 3.4% growth. Current-dollar GDP, which does not strip out price changes, rose 5.6%.

The advance estimate is the first of three. The BEA will revise it in the second estimate (late November) and the third estimate (late December). We explain the revision process in Why Economic Data Gets Revised.

Real final sales to domestic purchasers, a measure of underlying demand that strips out inventories and trade, rose 4.9%. That was the strongest reading since Q2 2025.

The chart shows annualised quarterly GDP growth from Q1 2025 to Q3 2026. Growth has swung between near-zero readings (0.1% in Q1 2025, 0.2% in Q4 2025) and quarters above 3%.

This is the advance estimate. No revisions to prior quarters were published in this release. The second estimate, due in late November, will incorporate more complete source data.

The GDP report includes the PCE Price Index, one of the two inflation gauges the Fed watches most closely. It rose 2.1% on the quarter, down from 2.5% in Q2 2026.

The core PCE Price Index, which strips out food and energy, rose 2.5%. The Fed's target is 2%. We explain the measure in What Is PCE Inflation?

The quarterly PCE figures in the GDP report are not the same as the monthly PCE release. The monthly reading for September is due on 31 October.

The GDP report came out at 8:30 a.m. Eastern time on 29 October. The Fed had held its target range for interest rates at 3.75% to 4% the previous day. We cover that decision in FOMC October 2026.

These moves compare the close on 29 October with the close on 28 October:

The 10-year Treasury yield was 5.05% at the close on 28 October, the latest available reading from the Federal Reserve. The dollar was little changed against the yen at 157.81.

The Fed held its target range at 3.75% to 4% on 28 October, one day before this release. Inflation in the GDP report, at 2.1% on the headline measure, was close to the Fed's 2% target. The core measure, at 2.5%, remained above it.

The strong growth reading alongside moderating inflation gives the Fed room to wait. We explain the Fed's role in What Does the Fed Do?

The advance estimate puts Q3 growth at its fastest pace since Q2 2025. The BEA will revise the figure twice before year end.

The advance estimate uses incomplete source data. The BEA revises it as more data arrives. The second estimate comes about a month later. The third follows another month after that. Revisions can be large: the difference between the advance and third estimates has averaged about 0.5 percentage points in recent years.

The BEA compiles both GDP and the PCE Price Index. The quarterly PCE figure in the GDP report covers the full quarter. The separate monthly PCE release, due on 31 October for September, gives a more recent snapshot. The Fed watches both.

The BEA reports GDP growth at an annualised rate. It takes the quarter-on-quarter change and compounds it over four quarters. A 3.4% annualised rate means the economy grew at a pace that, sustained for a year, would produce 3.4% growth. Other countries, such as the UK, report the plain quarter-on-quarter rate instead.