US GDP growth likely accelerated to a 3.2% annualised pace in the third quarter of 2026, as resilient consumer spending and a booming wave of artificial intelligence investment more than offset the drag from higher oil prices linked to the war in the Middle East. The Commerce Department will publish its advance estimate of third-quarter gross domestic product at 8:30 a.m. Eastern on Thursday, less than a week before the midterm elections on November 3 that will decide control of Congress.
The forecast, from a Reuters survey of economists, would mark a clear step up from the 2.2% pace recorded in the April-to-June quarter and the fastest growth since the third quarter of 2025. It would also land at an awkward moment for the White House: the headline data point to an economy expanding briskly, while voters tell pollsters they feel squeezed by prices, and President Donald Trump faces record-low approval ratings.
The Reuters preview, published on Thursday morning, draws on a survey of economists conducted before the release of September's advance economic indicators report on Wednesday. That report complicated the picture: the goods trade deficit widened by $2.8 billion to $134.9 billion in September, larger than the $130.2 billion economists had forecast, as imports jumped to a record high on strong demand for capital goods tied to the AI spending boom.
Goods imports rose $8.1 billion to $344.1 billion in September, while exports climbed $5.3 billion to $209.2 billion. Trade has not contributed to GDP growth for three straight quarters, as the AI investment boom pulls in imports, mostly capital goods such as semiconductors used in data-centre construction. Economists estimated that the trade shortfall subtracted at least 4 percentage points from third-quarter growth, although Oxford Economics put the drag at 3.25 points. Either way, the drag was probably blunted by the sheer scale of AI-related investment.
Other forecasters point in the same direction. Analysts surveyed by Bloomberg also expect 3.2% growth, while the Federal Reserve Bank of Atlanta's GDPNow tracker estimates 3.3%. Goldman Sachs economists forecast personal consumption spending to have grown at a 3.4% annual rate and business fixed investment at a 10.2% rate. A measure of domestic demand that strips out inventories, trade and government — final sales to private domestic purchasers — grew at a 4.6% rate in the second quarter and is expected to have surged again.
The third quarter covered July through September, a period in which two forces pulled the economy in opposite directions. On one side, households kept spending and companies kept building. Consumer spending is projected to have increased at above a 3.0% pace, supported by historically low layoffs and moderate hiring, even though wage gains have at times lagged inflation. Households have been saving less and dipping into their savings to fund spending, and the strong stock market has supported spending by higher-income households in particular.
On the other side, the war in the Middle East pushed energy prices higher, with average petrol prices still above $4 a gallon, and the Federal Reserve's fight against inflation kept borrowing costs elevated. Rising mortgage rates are expected to have pushed residential investment back into contraction last quarter. Higher borrowing costs have overshadowed a moderation in house prices, putting home ownership out of reach for many young adults. Homebuilding is also being constrained by land and labour shortages amid an immigration crackdown, and by higher prices for materials due to tariffs on imports.
The construction of data centres to support AI likely lifted business investment in non-residential structures after stabilising in the second quarter, and a rebound in government spending is also anticipated. AI likely contributed to spending on intellectual property products as well, and inventories are expected to have added to GDP growth last quarter.
The growth backdrop helps explain the Federal Reserve's latest decision. On Wednesday, the central bank left its benchmark interest rate in the 3.75% to 4.00% range in a 10-2 vote, with Governors Lisa Cook and Michelle Hammack dissenting in favour of a quarter-point increase, while acknowledging that inflation "remains elevated". Fed Chair Kevin Warsh told reporters that "economic activity is expanding at a strong pace" and that "while uncertainty remains, owing in part to geopolitical developments, domestic spending has been resilient". Economists still expect the Fed to raise rates in December, with markets pricing roughly a three-in-four chance of at least one more increase by year-end.
The headline 3.2% figure is an annualised rate: it shows how fast the economy would grow if the third quarter's pace continued for a full year. The composition matters as much as the headline. Consumer spending is the engine, at more than two-thirds of the economy, and a reading above 3.0% would confirm that households have not yet buckled under higher energy and food prices. Business equipment spending, growing at a double-digit pace for a third straight quarter, shows that the AI build-out is now a measurable macroeconomic force rather than a stock-market story.
The trade drag is the counterweight. A deficit of $134.9 billion in September alone, the largest since March 2025, means that a large share of the spending on AI equipment leaked abroad through imports. That is why some economists warn the advance estimate could come in below the 3.2% survey figure: the Reuters survey was conducted before Wednesday's trade data, and the final GDP calculation will reflect the full import surge.
Inflation data due alongside GDP will complete the picture. The Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, is expected to rise 0.5% for September and reach 3.6% over the 12 months through September, up from 3.4%. Core PCE, which excludes food and energy, is expected to rise 0.3% for the month and 3.1% over the year, up from 3.0%. Strong growth with hot inflation would argue for more tightening; softer inflation with decent growth is the market's preferred outcome.
"People are very upset about high energy and food prices, and yet the fundamentals for consumers are still decent," said Gus Faucher, chief economist at PNC Financial. "We still have job growth, wage gains and there's the strong stock market that is supporting spending by high-income households, in particular, so consumers continue to increase their spending at a pretty steady clip."
"There's likely to be more discretion when it comes to investment in AI, but the underlying momentum remains quite strong," said Gregory Daco, chief economist at EY-Parthenon. "AI-related investment is likely to remain a key pillar of US economic activity, even if there are some risks of pullbacks and some questions as to the return on all of its investment."
Not everyone is reassured. "It appears that households made a judgment when the conflict began earlier this year that the run-up in energy prices would prove mostly temporary," said Stephen Stanley, chief US economist at Santander US Capital Markets. "That assessment may prove wrong, so consumers may need, at some point, to tighten their belts."
"The overall picture is that the economy is growing at a decent pace, but the primary factors are an AI-driven investment boom and consumption driven primarily by rising stock wealth," said Dean Baker, senior economist at the Center for Economic and Policy Research. "It's unclear how long this can continue, but this is not a very stable picture, nor a very positive one for most working people."
The timing of the release is what turns an economic statistic into a political event. The advance GDP estimate lands five days before voters choose the next Congress, and the economy is the central issue of the campaign. Polls show a wide gap between the data and the mood: a Reuters/Ipsos poll found 73% of voters saying their cost of living is heading in the wrong direction, and surveys cited by Forbes put Trump's approval on the economy at 26% to 34%.
That gap is the story of this expansion. Growth above 3% would be well above the roughly 2% pace that some Federal Reserve officials regard as the non-inflationary growth rate, yet households' downbeat assessment of the economy is reflected in the president's record-low approval ratings and a sharp deterioration in consumer sentiment. The benefits of growth have flowed disproportionately to higher-income households through stock wealth, while lower-income households face petrol above $4 a gallon, mortgage rates that keep home ownership distant, and food prices that have not come back down.
For the Federal Reserve, the data will shape the December decision. Strong growth alongside PCE inflation at 3.6% would support the case for another rate increase, as Cook and Hammack argued this week. A softer GDP print, dragged down by the import surge, would give the doves more room to argue for patience. Either way, Thursday's twin release — GDP and PCE at 8:30 a.m. Eastern — is the most important data morning between now and the election.
Thursday's release is only the advance estimate. The Commerce Department will revise the third-quarter figure twice more as fuller data arrive, and the trade data already suggest the first revision could move the number. Markets will react first to the headline, then to the composition: consumer spending, business investment, inventories and the trade drag.
After Thursday, attention turns to Friday's employment cost index for the third quarter, forecast to rise 0.8%, and then to the Federal Reserve's December meeting, where economists still expect a rate increase. Amazon reports earnings after the close on Thursday, capping a week in which the Fed decision, big tech results, GDP and PCE have all landed within days of each other.
Politically, both parties will claim the number within minutes of its release. The White House will point to growth above 3% as evidence that its economic programme is working. Democrats will point to the prices voters actually pay and to the trade deficit as evidence that the growth is borrowed, uneven and exposed to the war's costs. The voters who decide the midterms on November 3 will have heard both arguments before they reach the ballot box.
Economists surveyed by Reuters expect GDP to have increased at a 3.2% annualised rate in the third quarter, up from 2.2% in the second quarter. The Atlanta Fed's GDPNow tracker estimates 3.3%.
The Commerce Department publishes its advance estimate of third-quarter GDP at 8:30 a.m. Eastern on Thursday, October 29, 2026, alongside September PCE inflation data.
Resilient consumer spending, projected above a 3.0% pace, and AI-related business investment, with equipment spending expected to grow at a double-digit pace for a third straight quarter.
A widening goods trade deficit, which hit $134.9 billion in September, its largest since March 2025, as AI-related imports surged to a record high. Economists estimate trade subtracted at least 4 percentage points from growth.
It lands five days before the November 3 elections that decide control of Congress, and the economy — especially the cost of living — is the campaign's central issue. The data will also shape the Federal Reserve's December rate decision.
Related coverage: Fed holds rates at 3.75% to 4% in 10-2 vote as inflation stays elevated, US consumer confidence jumps to 91.7 in October, beating forecasts sharply, and Wall Street edges higher as Fed holds rates.
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