US Economy Grows at Fastest Pace In a Year Amid Consumer Spending Strength

03:57 PM EDT, 10/29/2026 (MT Newswires) -- The US economy expanded at the fastest pace in a year in the third quarter, aided by robust consumer spending, official data showed Thursday. Real gross domestic product in the world's largest economy rose at an annual rate of 3.4% in the September quarter, marking the strongest growth since the third quarter of 2025, according to an advance estimate by the Bureau of Economic Analysis. The consensus was for 3.2% growth in a survey compiled by Bloomberg. In the second quarter, real GDP grew 2.2%. Personal consumption expenditures jumped 3.8%, stronger than Wall Street's views for a 3.4% increase. Gross private domestic investment surged 19%, the strongest growth since the first quarter of 2025, with equipment-related investments jumping about 21%. Private nonresidential investment gained about 13%. While economic growth was "choppy" last year, consumer spending and private nonresidential investment have been consistent contributors to growth in 2026, Jefferies Chief US Economist Thomas Simons said in a note e-mailed to MT Newswires. "The (artificial intelligence) surge is generating one of the longest runs of strong investment growth on record," Simons said. "There is a lot of noise in the data due to global trade disruptions, a massive inventory de-stocking cycle, and inconsistent Federal government spending, but the primary drivers of growth show no signs of slowing any time soon." The PCE price index rose 2.1% in the third quarter, while the core measure -- which excludes the volatile food and energy components -- advanced 2.5%, official data showed. "These measures are the closest to the (Federal Reserve's) 2% target since mid-2024, but following quarterly increases of 5% and 4.2% in the headline PCE deflator in the first two quarters of 2026, this is not going to give the Fed much assurance that they are making progress toward achieving their inflation goal on a durable basis," Simons said. Separately, government data showed Thursday the Fed's preferred inflation gauge accelerated in September. On Wednesday, the Fed held its benchmark lending rate steady, following last month's 25-basis-point increase, in a divided decision. Economic activity is expanding at a "strong" rate, the central bank's Federal Open Market Committee said at the time. "While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient," the FOMC said Wednesday. "Productivity growth is strong, and capital investment is robust."