Economy Quick Notes – Oct 2026

The personal consumption expenditures price index rose a seasonally adjusted 0.3% for the month, putting the 12-month gain at 3.4%. Economists surveyed by Dow Jones had been looking for increases of 0.3% and 3.7%, respectively.

The economy grew at a faster pace than previously estimated in the first half of 2025, data from the Commerce Department showed Wednesday.

Gross domestic product rose at a 2.2 percent annualized rate in the April through June period, the government said. The previous estimate had been for 1.5 percent growth.

The upward revision reflected stronger readings for consumer spending, investment, and government expenditures. Real consumer spending rose 3.8 percent annualized, revised up from 3.4 percent.

Nominal growth, which is not adjusted for inflation, was revised up from an estimated pace of eight percent to 8.5 percent.

Growth in real final sales to private domestic purchasers, a critical measure of underlying economic strength, was revised up by four-tenths of a percentage point to 4.6 percent. Prior to adjusting for inflation, final sales to private domestic purchasers rose at an annualized pace of 9.5 percent.

Personal consumption expenditures rose 0.9 percent, or $190.8 billion, the Commerce Department’s Bureau of Economic Analysis said Wednesday, after a revised 0.1 percent increase in July. Adjusted for inflation, spending increased 0.6 percent, following a 0.1 percent gain the prior month.

The burst has not been matched by how households say they feel. The Conference Board’s consumer-confidence index fell to 81.9 in September, the lowest level since 2014. The University of Michigan’s sentiment index finished September at 48.1, down from 51.7 in August and 15 percent below its January reading. Consumers have pointed to high prices, gasoline costs and a weaker outlook for jobs and business. Those worries have not shown up at the cash register.

Spending on goods increased $114.1 billion and spending on services rose $76.7 billion. The largest contributions came from other nondurable goods, gasoline and other energy products, food services and accommodations, and motor vehicles and parts. Recreational goods also rose. Recreation services were the exception, falling $10.3 billion.

Incomes rose at a level consistent with the Federal Reserve’s two percent inflation goal. Personal income increased 0.2 percent, or $66.6 billion, less than economists had expected, as private wages and government social benefits rose. Disposable personal income—income after taxes— increased 0.3 percent. After inflation, real disposable income was unchanged.

Households spent more of what they earned, which typically implies consumers are confident about their employment and income prospects. The personal saving rate fell to 4.1 percent from a revised 4.6 percent in July.

Private companies added 90,000 jobs in September, up from a revised 36,000 jobs added in August, ADP said. Economists had expected around 70,000 jobs.

“It’s a strong report. After a three-month slowdown, job creation rebounded and pay growth remained solid,” said Dr. Nela Richardson, chief economist at ADP.

Hiring gains were broad-based. Manufacturing added 17,000 workers and construction added 15,000. Leisure and hospitality added 22,000. Information added 3,000. Education and health services added 55,000. The financial sector lost 16,000 jobs and professional and business services shed 11,000.

Small businesses with fewer than 50 employees added 23,000 workers. Medium businesses, with between 50 and 500 employees, added 54,000. Larger businesses added 14,000.

Pay rose 3.0 percent for job-stayers year over year in August and 4.8 percent for job-changers, ADP said. Construction pay is up four percent and manufacturing pay is up 3.5 percent. With financial services, where pay is also up 3.5 percent, these were the strongest sectors.

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