# U.S. economy grows 3.4% as inflation stays above target > Third-quarter GDP beat forecasts while September prices accelerated, leaving the Federal Reserve with mixed signals on its next move. - Title: U.S. economy grows 3.4% as inflation stays above target · CNBC - Summary: Third-quarter GDP beat forecasts while September prices accelerated, leaving the Federal Reserve with mixed signals on its next move. U.S. third-quarter GDP… - Keywords: u.s. economy, gdp growth, inflation, federal reserve, pce index, consumer spending, interest rates, business, finance, economy, grows, stays - Source: CNBC — https://cnbc.com/2026/10/29/pce-inflation-report-september-2026-.html - Author: Jeff Cox - Published: 2026-10-29T12:32:52+00:00 - Read time: 1 min - Topics: u.s. economy, gdp growth, inflation, federal reserve, pce index, consumer spending, interest rates, business, finance ## Economy outpaces expectations U.S. gross domestic product increased at a seasonally adjusted annualized pace of three point four percent in the third quarter, better than the three point one percent estimate. ## Inflation accelerates in September The personal consumption expenditures price index rose zero point five percent for the month, putting the annual inflation rate at three point six percent, the largest monthly increase since March. ## Core inflation also elevated Excluding food and energy, core PCE posted zero point three percent monthly and three point one percent annually, both in line with consensus but well above the Federal Reserve's two percent target. ## Consumer spending resilient but soft Consumer spending climbed zero point five percent in September, slightly below the forecast for zero point six percent gain, while personal income rose just zero point two percent versus the estimate for zero point three… ## Fed holds rates steady for now The Federal Reserve voted to hold its benchmark interest rate in a range between three point seventy-five and four percent. > The period right in front of us is information rich. There is a lot that's happening in the world. ## Energy surge drives price increases September's price increases were driven largely by a surge in energy costs. Gasoline and other energy goods saw a nine point two percent rise for the month while energy goods and services broadly jumped five… ## Layoffs remain low despite headwinds Initial jobless claims edged lower to a seasonally adjusted one hundred ninety-four thousand for the week ended October twenty-fourth, below the estimate for two hundred thousand and near levels last seen in the late nineteen… ## Key takeaway U.S. third-quarter GDP grew three point four percent, beating expectations, but September inflation remained elevated at three point six percent, complicating the Fed's policy outlook.