US economy grew 3.4% in the third quarter, led by consumers and AI spending

The US economy grew faster than expected in the third quarter of 2026, according to government data covered by several major outlets on October 29. CNBC and The New York Times report that gross domestic product, or GDP, rose 3.4% in the July-through-September period.

Reuters says the growth came mainly from two things: Americans kept spending, and businesses kept investing in artificial intelligence. The report also arrived just as other data showed price increases picking up, and only days before the midterm elections.

What happened

The headline figure is 3.4% GDP growth for the third quarter. CNBC calls it "better-than-expected," which means it came in above what economists had forecast ahead of the release.

Reuters credits "robust consumer spending" and "AI-related investment" for powering the economy. In other words, households were buying goods and services at a healthy pace, and companies were spending on AI-related projects.

CNBC's headline also notes that inflation "accelerates" in September, meaning prices rose faster that month than before. ABC News looked at the bigger picture in a piece on what to know about the US economy as the midterm elections approach.

How to read a GDP number

Background: GDP measures the total value of goods and services an economy produces. It's the most common way to tell whether an economy is growing or shrinking.

In the US, quarterly GDP growth is usually reported as an "annualized" rate. That means the government shows what the growth would add up to if the economy kept growing at that pace for a full year. So 3.4% doesn't mean the economy grew 3.4% in three months. It shows the yearly pace of growth during that quarter.

Also background: the first GDP estimate for a quarter is often revised later, once the government has more complete data. The number can move up or down.

Why consumers and AI matter

Background: Consumer spending is the biggest piece of the US economy, usually around two-thirds of GDP. When households keep buying, the economy tends to keep growing.

Business investment, which covers spending on equipment, software and buildings, is a smaller but important piece. Reuters highlights AI-related investment as a driver, which reflects how much companies have been spending on things like computing equipment and data centers.

The headlines don't say how long either trend will last. A beginner should mostly notice that growth this quarter rested on these two supports.

Why it matters for everyday people

Strong growth usually goes along with businesses hiring and people having money to spend. But CNBC's point about faster inflation in September is the other side of the story. When prices rise faster, people's paychecks don't go as far.

Background: The Federal Reserve, the US central bank, watches both growth and inflation when it sets interest rates. Those rates affect what people pay on mortgages, car loans and credit cards. Strong growth and rising inflation can make the Fed's choices harder.

As ABC News notes, the timing also matters politically. With midterm elections close, voters and candidates are likely to look at these numbers to judge how the economy is doing.