The United States publishes its advance estimate of third-quarter GDP alongside September’s personal income and outlays report at 8:30 a.m. ET on Thursday, giving investors two readings that could reshape expectations for interest rates through December and into 2027, according to the Bureau of Economic Analysis calendar. Growth is expected to pick up to 3.0% annualised from 2.2% in the second quarter, according to market consensus cited by Newsquawk and Admiral Markets. Headline PCE inflation, the Fed’s preferred gauge, is expected at 3.6% year on year, with core PCE at 3.1%, according to the same consensus. The Atlanta Fed’s GDPNow tracking estimate was modelling 3.5%, while Continuum Economics forecast 2.8%.
Why the two reports land together
The timing matters because both releases arrive one day after the Federal Reserve’s October policy decision, according to CryptoDaily. The Fed held rates at 3.75% to 4% on Wednesday in a 10-2 vote, with two officials preferring a hike, and markets now price a December increase at roughly 78% to 85%. A hot print could add fuel to that hike narrative; a soft one could cool it. Investors will focus on three figures: real GDP growth, core PCE inflation and real consumer spending, according to CryptoDaily. TD Securities expects September PCE data to confirm elevated inflation pressures, with core PCE forecast at 0.32% month on month and 3.1% year on year, headline PCE at 0.49% month on month driven by energy, and real spending turning slightly negative.
What forecasters disagree about
Continuum Economics expects domestic demand to remain strong, with final sales to domestic buyers rising 3.8%, matching the second quarter’s gain, and business investment, fuelled by AI, rising 9.6%. It expects inventories to add about 2.4 percentage points to growth, more than offset by net exports subtracting about 3.4 points as an 18.7% surge in imports coincides with a 6.4% fall in exports, according to Newsquawk. The GDP release is the first official estimate for the quarter and will be revised as additional information becomes available, according to the BEA. The PCE report provides a more recent monthly picture of inflation and household spending. Forecasts are not outcomes, and the market reaction will depend on how far the actual prints land from consensus.
Related: Fed Holds Rates at 3.75%-4% as Two Officials Push for Hike and Wall Street Edges Higher as Fed Hold Lifts Stocks Slightly
