Economy
US economy grows at 3.4% in Q3, beating estimates
The U.S. economy expanded at a healthy 3.4% in the third quarter of 2026, the Commerce Department said Thursday, beating market expectations and providing a slight boost to President Donald Trump ahead of midterm elections next week and concerns over higher fuel prices.
“The contributors to the increase in real GDP (gross domestic product) in the third quarter were increases in investment, consumer spending, and government spending that were partly offset by a decrease in exports,” the department’s Bureau of Economic Analysis (BEA) said in a statement.
Thursday’s data was an advance estimate released by the BEA, with two further estimates due in the coming weeks that could see the number revised.
The BEA said the acceleration in GDP growth was driven by an increase in investment and an upturn in government spending, which were partially offset by a decrease in exports.
Imports, which are a subtraction in the formula for GDP, also increased more in the third quarter than the previous one.
Trump’s Republican Party faces a stiff test from the Democratic Party for control of Congress in polls next Tuesday, with the president’s handling of the economy a key issue for voters.
Trump’s war on Iran has sent global energy prices skyrocketing due to Tehran’s retaliatory action, with U.S. consumers paying an average of 42% more at the pump for regular gasoline, according to data from the AAA motor club.
His wide-ranging tariff policies have also upended global trade and fueled inflation.
On Thursday, new data showed the preferred gauge for inflation of the Federal Reserve (Fed) rose by 3.6% year-over-year in September, an increase from the previous month.
The Fed prefers to use the Personal Consumption Expenditures (PCE) price index when gauging inflation, as it takes into account a broader range of household expenditures than Consumer Price Index (CPI) inflation.
On Wednesday, the U.S. central bank voted to keep interest rates steady, citing the need for more data to gauge how best to battle the surging inflation.
Chair Kevin Warsh reiterated the Fed’s commitment to its long-term 2% target for PCE inflation, which it has not achieved for more than five years.
He termed current inflation levels “too high,” but cautioned against moving too quickly, saying the Fed had seen some tightening of financial conditions in response to the Fed raising interest rates in September, its first hike in three years.
The European Central Bank (ECB) held its benchmark interest rate unchanged at 2.5%, as expected, while warning that higher borrowing costs could hold back economic growth.
“Financing conditions have tightened since the Governing Council’s last meeting, which is likely to weigh on inflation and growth,” the central bank for the 21-nation eurozone said in a statement.
Shortly before announcing its interest rate decision, the ECB said its president, Christine Lagarde, would step down on Feb. 7, 2027, nearly nine months before her eight-year term was due to end in late October.
The sharp rise in energy prices following the outbreak of war in Iran has pushed up consumer prices across the eurozone, strengthening the case for what would have been the ECB’s third interest rate increase this year.
Eurozone inflation climbed to 3.8% in September, its highest level in three years, driven largely by rising fuel prices.
The rate is now well above the ECB’s medium-term inflation target of 2%.
However, higher borrowing costs can also discourage investment and weigh on economic growth.
Türkiye’s annualized goods and services exports have reached a new high of $409.1 billion as of September, Trade Minister Ömer Bolat said on Thursday, marking Republic Day.
Bolat, in a written statement issued by his ministry, said that Türkiye’s economy and foreign trade had undergone a profound transformation over the past 20 years, underscoring the surge in exports from the early days of the republic to the present day.
“As of September, we estimate that our annualized exports of goods and services, including our forecast for services exports, reached $409.1 billion, the highest level in the history of our republic,” he said.
“This achievement is the result of the determination of our producers, the efforts of our exporters, the courage of our entrepreneurs and the unity of our nation,” he added, also suggesting that it represents the quality, competitiveness and appeal of Turkish goods and services.
Moreover, he pointed out that as the nation marks the 103rd anniversary of the republic, the authorities “continue to move toward a stronger and more prosperous future with the vision of ‘A Türkiye that produces, exports and grows.'”
Bolat noted that Türkiye’s economy, which was heavily dependent on agricultural products in its export structure in 1923, had developed a broad, value-added export portfolio spanning sectors from automotive and household appliances to the defense industry and software.
“Our goods exports, which amounted to just $50 million in 1923, rose to $2.9 billion in 1980 and $36.1 billion in 2002. As of September, our annualized goods exports reached $283.7 billion, setting a new record,” Bolat noted.
He also stated that Türkiye’s share of global goods exports averaged 0.38% between 1980 and 2000, rising to 0.55% in 2002 and 1.04% in 2025.
‘Dynamic export economy’
“In the early years of our republic, exports reached only 24 countries and covered 30 product chapters. Between January and September this year, they extended to 223 countries and customs territories, covering all product chapters and approximately 13,000 different products,” he further said.
“Türkiye now has a dynamic export economy with strong competitiveness, delivering its products to every corner of the world,” he added.
Recalling figures from the past, Bolat also mentioned that in 1973 it took a full year to achieve $1 billion in exports, while today, daily exports sometimes exceed $2 billion in volume.
“This extraordinary progress is the clearest indication of the enormous increase in Türkiye’s production capacity, the confidence and competitiveness our exporters have gained in global markets, and the economic maturity we have achieved as we enter the second century of our republic,” the minister said.
Similarly, he stressed that Türkiye had become not merely a producer but also a major trading and exporting power capable of delivering its products to the world. Despite challenges in the global trade environment, he said, Türkiye had maintained its economic resilience and reached record export levels in numerous markets.
Bolat also said exports to the EU countries had increased from $11.3 billion in 1996 to an annualized $118.7 billion as of September, driven by the momentum generated by the customs union.
‘Reliable player’
He also reiterated Türkiye’s transformation from an agriculture-oriented economy into a strong manufacturing and industrial exporter focused on high-tech production.
“Today, Türkiye has become one of the reliable players in global trade, with a comprehensive value chain extending from production and exports to technology and logistics,” he said.
He also informed that the share of medium-high- and high-technology products in total manufacturing industry exports, which stood at 30.4% in 2002, rose to 43.5% in 2025 and reached an annualized 44.1% as of September 2026.
“This major achievement over the past 24 years has been accompanied by uninterrupted growth in our exports of medium-high- and high-technology products,” he maintained.
He also provided data on the growth performance of the Turkish economy, noting that Türkiye rose from the world’s 21st-largest economy in terms of nominal gross domestic product (GDP) in 2002 to the 16th-largest in 2025.
“In terms of GDP calculated using purchasing power parity (PPP), it advanced from 16th place globally in 2002 to 11th place in 2025,” he added.
He also pledged to continue efforts to strengthen the country’s position in the global economy.
European Central Bank (ECB) chief Christine Lagarde said on Thursday she would step down from the role early in February next year, ending months of speculation about her future at a complex juncture for Europe and the ECB.
Lagarde will step down on Feb. 7, giving current European Union leaders time to pick a successor well before a French presidential election that polls show far-right candidate Marine Le Pen is favourite to win.
“European Central Bank President Christine Lagarde today informed the Governing Council and the President of the European Council António Costa that she will step down from her position on 7 February 2027,” the ECB said in a press release.
The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are seen as frontrunners to replace Lagarde.
Lagarde’s term was scheduled to run until the end of October 2027 but speculation about an early departure had been mounting for months, with the World Economic Forum (WEF) seen as a likely destination.
The move comes as the ECB is in the middle of a rate-hiking cycle, seeking to prevent an oil-price shock linked to the Iran war from feeding into other prices and wages.
But it must also contend with a surge in government bond yields, especially in debt-laden France, that has pushed up borrowing costs for households and businesses and which Lagarde has said will curb growth and inflation.
Caught between persistent inflation fuelled by a renewed surge in energy costs and deteriorating financing conditions, the ECB is widely expected to keep its deposit rate at 2.5% on Thursday while signalling that another increase, potentially as soon as December, remains likely.
The U.S. war with Iran has cost American taxpayers an estimated $47.1 billion, according to new Pentagon figures submitted to Congress, as the conflict’s financial toll fuels debate ahead of the midterm elections and President Donald Trump signals that further military action remains possible.
The figure from U.S. Central Command, which oversees operations in the Middle East, is as of Oct. 16 and offers the most up-to-date cost for the conflict since it was launched in late February by the United States and Israel. The latest price tag, obtained by The Associated Press this week, shows a $3.5 billion bump in U.S. spending since early September, when that figure stood at about $43.6 billion.
The growing cost of the unpopular war and its economic ripple effects on energy prices could hurt Republicans in next week’s midterm elections. Voters on Tuesday will decide which political party controls Congress during Trump’s last two years in office.
The Republican president has said new strikes on Iran are an option after the midterms and is sending more military resources to the Middle East, despite initially promising Americans a military campaign that would last only a matter of weeks. As the war’s costs in lives, tax dollars and economic impact grow, most voters say they want Congress to prioritize ending the conflict, according to a recent AP-NORC poll.
The expense of the conflict and military spending in general are already a contentious issue on Capitol Hill, where the Trump administration is pushing for the passage of a historic $1.5 trillion military budget proposal. The White House is also asking lawmakers to approve a $95 billion package that would help fund the Iran war and other priorities.
Wednesday marks eight months of the war, which Democrats have been trying to end through legislation that has failed to pass the Republican-controlled Congress.
“Trump and his ego led us into this war with no plan, no authority, and no exit strategy,” Senate Minority Leader Chuck Schumer of New York said in a news release. “Senate Democrats will continue to do everything in our power to end this disaster of a war and stop the costs, chaos, and corruption seeping from the White House.”
In the latest estimate, the bulk of the war’s costs are for replacing munitions, at about $29 billion. The advanced weapons most in demand and whose stockpiles have been drawn down are defensive missile interceptors, such as those launched by the Army’s Patriot and THAAD systems, with a single Patriot interceptor costing millions of dollars.
The Pentagon says about $11.9 billion is related to costs of operations, while an additional $6 billion is tied to equipment losses. The Air Force’s costs are now $7.6 billion, and the Army’s are more than $2 billion. The Navy’s costs were listed at $1.45 billion, which is a significant drop from the $2.2 billion listed in early September.
When asked why the Navy’s cost estimates decreased over the roughly six-week period, both the Navy and U.S. Central Command referred the questions to the Pentagon, which did not immediately respond to emails requesting comment on the new cost estimates.
The latest estimate does not include damage to U.S. bases in the Middle East, which the Islamic Republic has attacked with ballistic missiles and drones. A report from the Pentagon inspector general released last month said Iranian strikes have damaged and destroyed hundreds of buildings and other structures at U.S. bases in Kuwait, Bahrain, Qatar, the United Arab Emirates, Saudi Arabia, Iraq, Oman and Jordan.
The Pentagon’s official tally lists 21 service members killed and 865 wounded in the conflict. That count includes troops who died in medical events and other situations that do not have a direct connection to the conflict, with 18 service members having been killed from Iranian strikes, combat aircraft crashes or the disposal of Iranian drones.
While Trump has mused repeatedly about whether to make a deal with Iran or “finish them off,” a third aircraft carrier and thousands of additional troops are making their way to the region. The Trump administration also has reduced staffing at some U.S. Embassies after receiving intelligence that Iran has stepped up efforts to target American personnel.
The U.S. Federal Reserve left interest rates unchanged Wednesday, as widely anticipated, maintaining its cautious stance on monetary policy while assessing inflation trends ahead of next week’s midterm elections.
In a 10-2 decision, the U.S. central bank said it would maintain its benchmark interest rate within the current 3.75%-4.00% range while acknowledging that inflation “remains elevated,” upgrading its assessment of the economy, and hinting that further rate hikes may be coming depending on the performance of inflation.
“The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2% goal,” the rate-setting Federal Open Market Committee said in its latest policy statement. “The Committee will deliver price stability.”
Fed Governor Lisa Cook, currently targeted by President Donald Trump for removal from the central bank, dissented in favor of a quarter-percentage-point rate hike, as did Cleveland Fed President Beth Hammack, a consistently hawkish voice who also dissented in July for the same reason.
The Fed’s latest policy statement is a notable change from the September 15-16 meeting, with a hint of the sort of forward guidance Fed Chairman Kevin Warsh has said he wants to avoid.
The Fed’s assessment of the economy was upgraded to “strong” from the “solid” expansion seen as of the September meeting, while investment was still viewed as robust and job gains were keeping pace with the workforce.
The outcome of this week’s meeting was widely expected after top Fed officials indicated they saw no rush to raise rates again following the quarter-percentage-point increase approved last month, despite inflation data in the meantime that was stronger than forecast and concerns that price pressures are broadening across the economy.
Energy costs remain high, including for diesel fuel, which is a key input for shipping, agriculture, and other industries. Inflation and the cost of living in general have been central to the political races that will determine whether Trump’s Republican Party remains in control of both houses of Congress on Nov. 3, or whether Democrats move into leadership positions and gain more robust oversight powers, including over the Fed.
Investors expect further rate hikes will be needed, beginning in December and continuing into 2027, to lower inflation that is currently around a percentage point above the Fed’s target and has shown little progress in recent months.
The U.S. central bank has missed its inflation target for five and a half years, a fact that has left some officials worried that businesses and households are becoming accustomed to faster price increases and may plan for them in ways that will make inflation harder to control.
The U.K. government will hike a surcharge on profits earned by banks operating in the country to help offset soaring energy bills, Treasury chief John Healey said Wednesday, while announcing the highly anticipated budget.
The additional corporate tax rate will double to 6% to finance a one-off subsidy to millions of households struggling with higher energy costs, Healey told parliament as he delivered an annual budget report.
He used his first budget statement to offer households and businesses support with their energy bills this winter in the face of what he termed “global economic storms.”
Healey, who was appointed chancellor of the exchequer in July when Andy Burnham became prime minister, said the Iran war was not something the British government wanted.
As a result, he said his “choice in the budget today is to give families and businesses some breathing space now,” as the consequences of the conflict in the Gulf played out.
“For families, that means higher prices at the pump, higher energy bills and higher mortgages,” he said in his statement, arguably the key set piece of the parliamentary calendar.
“For businesses, higher running costs and more expensive loans. And the impact is felt in the public finances too. Driven by the conflict in the Middle East, government borrowing costs across the G-7 are reaching highs not seen for decades.”
Among the support measures announced in the early stages of Healey’s speech was a 100-pound ($133) one-off payment this winter that will help 20 million lower- and middle-income households.
Other measures included the extension of a cut in the sales tax on electricity bills and the abolition of a charge paid on gas bills.
Energy bills are set to spike sharply in the coming months. The Iran war and the ensuing bottlenecks in the Strait of Hormuz have squeezed global oil and gas supplies, pushing prices higher.
With the public finances already stretched, Healey announced some tax rises to pay for the measures.
Bank tax on profits hiked to 6%
One source of revenue is to come from the banks, which have benefited from higher interest rates. Healey increased the surcharge on their profits from 3% to 6% but only for 15 months from January.
“Amid global economic storms, I am looking to our banks to help fund breathing space for British families,” he said.
Another revenue source will come from the gambling sector by increasing the machine games duty.
Healey said the British economy has been more resilient than anticipated this year and will grow by 1.2% in 2026, more than previously predicted.
However, he says inflation is higher than predicted earlier this year and likely to remain so for the coming year or two.
Inflation in the U.K. has risen to a near one-year high of 3.5% and is expected to rise further in the coming months. As a result, the Bank of England (BoE) is expected to raise interest rates soon, which will further raise the costs to the government of servicing its debt.
Low-key budget
Outside of the energy price support, Healey’s overall budget was low-key, especially at a time when bond markets are fretting over debt levels around the world. France has been in the spotlight recently following a wave of protests that have exposed the parlous state of its finances.
The main problem facing Healey is the same as that which confronted his predecessor Rachel Reeves, who was chancellor after Labour returned to power in a landslide election victory – the country’s debt mountain.
Even though the trajectory of the public finances was recently given a nod of approval from the International Monetary Fund (IMF), the U.K.’s debt has passed 3 trillion pounds for the first time ever, requiring 8% of government spending to service it.
Healey said that in forecasts provided by the independent Office for Budget Responsibility, the U.K. will spend 14 billion pounds more on debt interest this year.
“Those are the storms we face,” he said. “We can’t wish them away.”
Online marketplaces to collect tax from sellers
Healey also said on Wednesday he would make online marketplaces responsible for collecting value added tax (VAT) owed by retailers selling on their platforms.
“I will strengthen the requirements for online marketplaces so that sellers cannot avoid paying VAT when they sell online,” Healey said in his budget speech to parliament.
The change means that online marketplaces, such as Amazon, eBay, Temu, Shein and Alibaba, will become responsible for collecting the VAT which is charged on sales by sellers on their sites.
The finance ministry said the change, to be implemented from October 2027, is designed to tackle VAT evasion and support competition by helping ensure businesses that pay the tax they owe are not undercut by those that do not.
The rules will apply to U.K. businesses that are VAT registered or make sales of more than 90,000 pounds on an individual online marketplace.
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