The economic backdrop entering the fourth quarter of 2026 is more complex than it was earlier in the year, as growth has decelerated meaningfully, while inflation has re-accelerated further. Despite intensifying geopolitical conflict, surging oil prices, and persistent inflation, the U.S. economy has continued to show underlying strength, with strong corporate earnings, resilient manufacturing activity, and a labor market that has proven more resilient than midsummer data suggested.

The economic backdrop entering the second half of 2026 is more complex than it was at the start of the year, as growth has re-accelerated meaningfully, but so has inflation. Despite geopolitical conflict, higher oil prices and persistent inflation, the U.S. economy has continued to show underlying strength, with strong corporate earnings, rising manufacturing activity, and a labor market that has proven more resilient than first-quarter data suggested.

After accelerating in the summer, the U.S. economy decelerated meaningfully into the winter: according to the Bureau of Economic Analysis’ (BEA) second estimate, real Gross Domestic Product (GDP) grew at an annualized 0.7% in Q4 2025, down from 4.4% in Q3.