Third quarter 2026 wrapped up this week, surrounded by a flurry of noteworthy events and data releases. Let’s take a look at four such items

Inflation and Jobs Data

The Personal Consumption Expenditure (PCE) price index for August was released and was a cooler read of inflation than markets anticipated, rising 3% year over year (versus 3.3% expectation). The monthly increase of 0.3% for headline and 0.2% for core excluding energy and food was also lower than anticipated. Markets seemed to celebrate these lower than feared inflation numbers – however, it’s important to note the annua level (3%) remains above the Fed’s preferred 2% target and that 52% of the subcomponents of PCE are still rising above 3%.

ADP private payrolls were released (in advance of Friday’s Bureau of Labor Statistics jobs report) showing a 90,000 increase in ADP September employment, snapping a three-month slowdown. This report adds to the narrative that the labor market is in good shape, allowing the Fed to focus its efforts on reigning in inflation.

Consumer Confidence

Consumer Confidence, which measures how the general public feels about the economy, fell sharply in September. It now sits at 91.9, the lowest since 2014.

“The Consumer Confidence Index deteriorated notably in September, following two prior months of softening,” said Dana M Peterson, Chief Economist, The Conference Board. “The Present Situation Index fell sharply, while the Expectations Index slipped further into negative territory. Consumer appraisals of current business conditions became negative for the first time since September 2024. Perceptions of the current labor market also worsened, though remained within positive territory. Over the next six months, consumers expected both business conditions and the labor market to weaken. Consumers still anticipated their household incomes to rise, but less so compared to previous months.”

As noted in last week’s client question column on sentiment, often times consumer sentiment is a contrarian indicator for markets (ie: markets move higher when consumers feel worse). Until spending data starts to worsen, this is likely a positive from a contrarian perspective for broad market performance. However, this sharp drop in the attitudes of the consumer is clearly playing out in the consumer discretionary sector, where many well-known brands and retailers are not faring well this year, likely in reaction to consumer’s budgets being squeezed by food and energy prices.

Gross Domestic Product

Q2 2026 GDP data was revised upward on Wednesday to a 2.2% annualized rate (up from 1.5%). The 0.7 percentage point upward revision primarily reflects stronger-than-expected investments, consumer spending, and government spending. Personal spending was reported to have rise 0.9% in August, giving further credence to the ongoing strength in consumer spending which is a key element of US economic activity

White House Accord on “Super Intelligence”

On Tuesday, the CEOs of essentially every American tech company CEO gathered at the White House. The purpose of the meeting – ask these tech titans to regulate themselves. The output? It was not the establishment of a formal regulatory body. Rather, they drafted an Accord on Super Intelligence (“SI” being the new moniker for Artificial Intelligence that the President prefers). This was a voluntary agreement to adopt safety policies to include auditing, evaluation of systems by third parties, and risk reviews. After the meeting, President Trump emphasized that self-policing would be a major element of this policy and that the agreement was “morally binding.”

As we look to close out Q4 today (writing this on 9/30), markets are continuing to be pulled between two powerful forces – the ongoing exponential build-out of AI (which is a likely driver of economic growth and employment) and the lingering inflationary pressures (which is weighing on consumer sentiment). For now, this battle is evident in markets as well as equities reach all-time highs and rates continue to rise. Should definitely be an interesting end to 2026 as this game of tug of war continues!

Onward we go,