From the Desk - Economic Commentary
Scott Goedken, Institutional Strategies Director - 10/29/2026
U.S. stocks, Treasury yields and oil prices are opening the day lower following a heavy round of economic data and yesterday’s Federal Reserve decision to leave its target rate unchanged.
The Bureau of Economic Analysis’ advance estimate of third-quarter GDP showed that the economy grew at a 3.4% annual rate, ahead of expectations for 3.1% and up from 2.2% in the second quarter. That was the strongest GDP growth since the third quarter of 2025, when the economy grew 4.4%. Consumer spending increased 3.8%, matching the second quarter’s pace and the strongest back-to-back performance since late 2024. Business investment climbed 12.7%, its largest increase since 2020. Real final sales to private domestic purchasers increased 4.9%, the fastest pace since the second quarter of 2021, showing strength in underlying private-sector demand.
The Bureau of Economic Analysis’ September Personal Income and Outlays report showed inflation taking a larger share of household income as the quarter ended. The PCE price index rose 0.5%, its largest monthly increase in six months, and was up 3.6% from a year ago. Core PCE increased 0.3% for the month and 3.1% from a year ago. Much of the increase in headline inflation came from energy, with gasoline and other energy goods prices jumping 9.2% during September. Personal income rose 0.2%, short of the 0.3% forecast, while consumer spending increased 0.5% against expectations for 0.6%. After adjusting for inflation, consumer spending was essentially flat, real disposable income fell 0.3% and the personal saving rate dropped to 3.8%.
The Department of Labor’s weekly unemployment insurance report showed initial jobless claims fell to 194,000 for the week ending October 24 from the prior week’s revised 195,000 and came in below expectations for 200,000. Continuing claims declined by 21,000 to 1.701 million. Initial claims remain near levels last seen in the late 1960s, pointing to a labor market where employers are still laying off relatively few workers.
Strong economic growth, persistent inflation and low levels of layoffs are keeping the possibility of another Fed rate increase firmly in play. Fed funds futures this morning are pricing in an 89% probability of at least a 25-basis-point rate increase at the December meeting.
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