Economic growth increased at its fastest pace in a year during the July-September quarter, rising 3.4% after 2.2% growth during the second quarter of 2026, according to Reuters. Economists had been expecting growth of 3.2%.
Consumer spending, which accounts for 70% of U.S. GDP, was robust, surging at a 3.8% rate, reportedly driven by services, such as health care; visits to restaurants and bars; and hotel and motel stays. However, momentum slowed by the end of the quarter.
According to Reuters: “There was a pullback in spending on goods like motor vehicles and household furniture. Higher-income households, whose wealth has been boosted by AI-related strength in the stock market, are driving much of the spending.”
The federal government’s spending grew at a 5.3% annual rate during the third quarter.
Business spending on equipment increased at a 20.9% rate, and business spending on intellectual property grew at an 8.4% rate.
“Growth isn’t enough to give American families economic security,” said Kyle Moore, chief economist at the Century Foundation. “Most of that growth has been lopsided, focused on the AI buildout. Wages for the typical worker still aren’t keeping up with increasing prices.”
