WASHINGTON — The U.S. economy expanded at a 3.4% annualized rate in the third quarter of 2026, exceeding economists’ expectations as business investment accelerated and consumers continued spending, according to new data from the Commerce Department.
The growth rate, the strongest in a year, marked a significant acceleration from the 2.2% expansion recorded in the second quarter and provided President Donald Trump with a favorable economic report days before the November midterm elections.
The Bureau of Economic Analysis released its preliminary estimate Thursday, Oct. 29, showing investments in business equipment, technology and other productive assets helped drive the expansion.
Consumer spending, which accounts for more than two-thirds of economic activity, increased at a 3.8% annualized rate. Nonresidential business investment climbed 12.7%, its strongest quarterly performance in nearly 15 years, supported by spending on equipment, software and technology infrastructure.
The White House credited Trump’s tax reductions, deregulation and efforts to encourage domestic production for the performance. Private investment in plants and equipment increased at a 9.4% annualized rate, according to figures highlighted by the administration.
Investment in information-processing equipment increased 37.4%, reflecting spending on artificial intelligence infrastructure and computing systems. Major technology companies have committed substantial capital to data centers and related equipment.
Government spending also contributed to growth, while declining exports and increasing imports partially offset gains. The trade deficit widened as purchases of technology equipment and other capital goods increased.
A Bloomberg survey found approximately 72% of participating economists underestimated the third-quarter growth rate. The White House said the economy expanded at a 2.7% annualized pace over the first three quarters of 2026, exceeding certain consensus and Congressional Budget Office projections.
The report also showed weakness: residential investment declined 3.3% amid elevated mortgage rates and affordability concerns. Inflation remained above the Federal Reserve’s target, with September’s core personal consumption expenditures price index rising 3.1% from a year earlier.
Economists differ over how much investment growth should be attributed directly to federal policy rather than corporate spending on emerging technologies.
The GDP figures are an advance estimate and are subject to revision. The Commerce Department is scheduled to release its second estimate of third-quarter GDP on Nov. 25.