US economy grows at 3.4% in Q3, beating estimates

The U.S. economy expanded at a healthy 3.4% in the third quarter of 2026, the Commerce Department said Thursday, beating market expectations and providing a slight boost to President Donald Trump ahead of midterm elections next week and concerns over higher fuel prices.

“The contributors to the increase in real GDP (gross domestic product) in the third quarter were increases in investment, consumer spending, and government spending that were partly offset by a decrease in exports,” the department’s Bureau of Economic Analysis (BEA) said in a statement.

Thursday’s data was an advance estimate released by the BEA, with two further estimates due in the coming weeks that could see the number revised.

The BEA said the acceleration in GDP growth was driven by an increase in investment and an upturn in government spending, which were partially offset by a decrease in exports.

Imports, which are a subtraction in the formula for GDP, also increased more in the third quarter than the previous one.

Trump’s Republican Party faces a stiff test from the Democratic Party for control of Congress in polls next Tuesday, with the president’s handling of the economy a key issue for voters.

Trump’s war on Iran has sent global energy prices skyrocketing due to Tehran’s retaliatory action, with U.S. consumers paying an average of 42% more at the pump for regular gasoline, according to data from the AAA motor club.

His wide-ranging tariff policies have also upended global trade and fueled inflation.

On Thursday, new data showed the preferred gauge for inflation of the Federal Reserve (Fed) rose by 3.6% year-over-year in September, an increase from the previous month.

The Fed prefers to use the Personal Consumption Expenditures (PCE) price index when gauging inflation, as it takes into account a broader range of household expenditures than Consumer Price Index (CPI) inflation.

On Wednesday, the U.S. central bank voted to keep interest rates steady, citing the need for more data to gauge how best to battle the surging inflation.

Chair Kevin Warsh reiterated the Fed’s commitment to its long-term 2% target for PCE inflation, which it has not achieved for more than five years.

He termed current inflation levels “too high,” but cautioned against moving too quickly, saying the Fed had seen some tightening of financial conditions in response to the Fed raising interest rates in September, its first hike in three years.