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Study · FIVE · 2026-10-30 · 4 min read · Rates and housing finance · Futures

Economy grew at a 3.4 percent rate as PCE inflation hit 3.6 percent

Growth and inflation both ran hot into the Fed's December meeting, and the ten-year Treasury yield still eased to 4.98 percent.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

DHI D.R. Horton Inc.adjacent

What changed since chapter twenty-two

The BEA put real GDP growth at an annualized 3.4 percent for the third quarter on Thursday 29 October, and the ten-year Treasury yield ended that day at 4.98 percent against 5.05. ^{[1, 4]}

The two releases were GDP (Advance Estimate), 3rd Quarter 2026 and Personal Income and Outlays, September 2026, both published at 8:30 in the morning Eastern. The PCE price index, a gauge the Fed tracks against its 2 percent goal, was 3.6 percent higher than a year earlier, the BEA said. Freddie Mac reported its 30-year fixed average at 7.24 percent, against 7.32 a week before. ^{[1, 3, 15, 6, 9]}

The record

Real GDP grew at a 3.4 percent annual rate after 2.2 percent in the second quarter, the BEA said. Investment, consumer spending and government spending drove it, partly offset by lower exports, while imports, which subtract from GDP, increased. Real final sales to private domestic purchasers, consumer spending plus business and housing investment, grew 4.9 percent against 4.6. ^{[1, 2]}

Within investment, the BEA named private inventories and equipment, led by computers and peripherals. Reuters reported that equipment added 1.16 percentage points to growth and inventories 1.61, while imports took off 2.64. AP reported housing investment down 3.3 percent, hurt by high mortgage rates, and lower in six of the last seven quarters. ^{[1, 9, 11]}

Over the quarter, the PCE price index was up at a 2.1 percent annual rate against 5.0 in the second, and the index without food and energy at 2.5 against 3.3, the BEA reported. September ran the other way: the PCE price index increased 0.5 percent on the month and the core index 0.3 percent. From a year earlier they were 3.6 and 3.1 percent. ^{[1, 3]}

Real disposable income, what households keep after taxes and inflation, was down 0.3 percent in September, and real spending was flat. The personal saving rate was 3.8 percent, the BEA said. ^[3]

On the Treasury's par yield curve for Thursday 29 October, the two-year was 4.61 percent against 4.67 on Wednesday, the seven-year 4.87 against 4.95 and the thirty-year 5.32 against 5.37. The ten-year less the two-year was 0.37 percentage point against 0.38, by the desk's arithmetic. ^[4]

The Treasury sold $44 billion of seven-year notes on Thursday 29 October at a high yield of 4.894 percent, the auction results show. Bids came to 2.46 times the amount offered, the ratio known as bid-to-cover. ^{[5, 13]}

Freddie Mac's survey put the 30-year fixed average at 7.24 percent as of Thursday 29 October, against 7.32 a week earlier and 6.17 a year earlier. The 15-year averaged 6.60 percent, Freddie Mac reported. ^[6]

Who it reaches

D.R. Horton (DHI) is adjacent as a builder and a mortgage lender: its release of Thursday 29 October says 'rising mortgage rates, affordability constraints and cautious consumer sentiment continued to pressure new home demand.' Fourth-quarter net sales orders decreased 7 percent to 18,619 homes and the cancellation rate was 23 percent against 20, the company reported. Its financial services arm, which provides mortgage financing for its buyers, had $219.2 million of revenue in the quarter. ^[7]

Homebuilders as an industry are reached through the housing investment figure AP reported. Reuters wrote that higher borrowing costs have overshadowed a moderation in house prices, weighing on demand for housing. ^{[11, 9]}

Where the sources disagree

The figures agree across the BEA, Reuters, AP and CNN, with one slip: CNN wrote that real after-tax income fell 0.3 percent 'from September', where the BEA measures September against August. Joseph Brusuelas of RSM told Reuters the data showed 'robust spending' and 'sizzling inflation data'. Olu Sonola of Fitch Ratings told CNN that if the Fed 'needed another reason to hike in December, this report just gave it one.' ^{[3, 9, 10]}

On the other side, Kyle Moore of the Century Foundation told Reuters growth was 'lopsided, focused on the AI buildout'. TD's Ksenia Bushmeneva wrote that higher borrowing costs and other headwinds 'are likely to weigh on consumer demand in the coming quarters', AP reported. Reuters noted that Treasury yields fell on the day even as economists read the data as support for a December increase. ^{[9, 12]}

What settles it next

The BEA publishes GDP (Second Estimate) and Corporate Profits, 3rd Quarter 2026 and Personal Income and Outlays, October 2026 on Wednesday 25 November, at 8:30 in the morning Eastern. The committee, which kept its range at 3.75 to 4 percent on Wednesday 28 October, meets again on Tuesday 8 and Wednesday 9 December with a Summary of Economic Projections. Freddie Mac's survey is released weekly on Thursdays at noon. ^{[1, 3, 14, 8, 6]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

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