Economic Update: Week of November 9, 2026

Growth

Real GDP grew 3.4% SAAR in 3Q, accelerating from 2.2% in 2Q and exceeding expectations, as strong business investment and consumer spending outweighed a drag from net exports. Real final sales to private domestic purchasers rose 4.9%, while nonresidential investment surged 12.7%, supported by continued AI-related spending. Consumer spending rose 3.8%, and federal spending added nearly 1% to growth, while residential investment fell 3.3% amid demographic shifts and high mortgage rates. Looking ahead, growth may moderate as fiscal support fades and housing remains weak, though business investment should continue to provide support. Imports of AI-related hardware may keep net exports a drag, but with PCE inflation at 3.6%, the Fed may look to raise rates in December.

NEW THIS WEEK

Jobs

The October jobs report showed payrolls rising by 165k, well above expectations of 70k, while August and September payrolls were revised higher by a combined 84k. Hiring was driven by professional and business services, health care and transportation and warehousing, helping private-sector payrolls rise by 159k. Government employment was relatively muted, adding just 6k jobs. The unemployment rate fell to 4.1%, while wage growth came in above expectations at 3.1% year-over-year, though it remained below headline inflation for the seventh consecutive month. For the Fed, a strengthening labor market leaves more room to focus on inflation.

NEW THIS WEEK

Profits

The third quarter is on track to mark the eighth consecutive quarter of double-digit earnings growth. Nearly 82% of S&P 500 companies have reported, with more than 80% beating expectations and EPS growth running at roughly 30% year-over-year. AI and Energy continue to do much of the heavy lifting, but profitability is also broadening across the rest of the market. Within AI, investment remains strong, though attention is increasingly shifting from spending to returns. Early signs of monetization are emerging, but the longer-term payoff will depend on meaningful revenue and productivity gains.

Inflation

Headline CPI rose 0.6% m/m, the largest monthly increase since April, pushing the y/y rate to 3.7%, driven primarily by a further acceleration in energy prices. Core CPI again came in hotter than expected, rising 0.3% m/m compared to consensus estimates of 0.2%. Core inflation was led higher by several categories, including recreation, used cars and trucks, education and airline fares. Elsewhere, food prices were contained. With core CPI still elevated relative to the Fed’s target, the question on investors’ minds has now shifted from “Will the Fed hike rates?” to “How many times will the Fed hike rates?”

NEW THIS WEEK

Rates

At its September meeting, the Federal Reserve voted 10-2 to maintain the federal funds rate target range at 3.75-4.00%. The committee upgraded its growth assessment to “strong” from “solid,” but also noted the need for more information to assess the impact of last month’s rate hike, preserving the option to hike or hold in December. Economic strength outside of AI was also highlighted while the committee reaffirmed its commitment to returning to 2% inflation. Although markets are pricing in a December hike, upcoming inflation data will be key in determining whether it materializes.

Risks

• An extended conflict in the Middle East could weigh on growth and pressure inflation higher.
• Elevated geopolitical tensions could spark bouts of volatility, particularly in expensive markets.

Investment Themes

• Solid fundamentals should allow U.S. markets to continue to grind higher.
• Fiscal stimulus, dollar weakness and regional catalysts should support strong international performance.
• Private markets can offer investors more ways to access the AI theme.

This weekly update provides a snapshot of changes in the economy and markets and their implications for investors.

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Originally Posted November 9, 2026 – Economic Update

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