Economy on Fire? Q3 Growth Smashes Forecasts While Inflation Hits the Bullseye

UNITED STATES - The U.S. economy grew strongly, with inflation remaining steady over the summer, the latest BEA data shows.

The PCE price index (the Fed's preferred measure of inflation) rose 3.6% year on year in September (up from 3.4% in August), exactly in line with expectations. On a monthly basis, the headline PCE inflation was up 0.5%.

Excluding volatile food and energy, core PCE inflation was up 3.1% year on year (up from 3% in August) and up 0.3% month on month, in line with expectations.

U.S. GDP grew at a solid 3.4% annualized rate in Q3 2026, beating the expected 3.2% growth. Chairman Warsh pointed to resilient domestic spending as the driver of the growth, but added: "It's our job to get inflation down."

Financial markets as a whole were pretty much unimpressed by the strong growth and steady inflation numbers. Crypto markets, on the other hand, were all over the place, with people speculating about what the mixed message of strong growth and high inflation might mean for the Fed's timetable for potential rate cuts.