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CNBC Economy

Third-quarter U.S. GDP increases a better-than-expected 3.4% as September inflation accelerates

The pace of price increases stepped up in September, keeping inflation well above the Federal Reserve's target, while the economy grew faster than expected in the third quarter, according to Commerce Department reports Thursday. The personal consumption expenditures price index increased a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 3.6%. The monthly increase was the largest since March but in line with the Dow Jones consensus, while the annual rate was 0.1 percentage point below. Excluding food and energy, the core PCE posted respective readings of 0.3% and 3.1%, in line with the consensus. While the Fed follows both measures closely, officials generally see the core reading as more indicative of longer-term inflation trends. While inflation continued to run ahead of the Fed's 2% target, the Commerce Department also reported that gross domestic product was strong in the third quarter. GDP increased at a seasonally adjusted annualized pace of 3.4%, better than the 3.1% estimate and well ahead of the 2.2% in the second quarter. Also, in September consumer spending proved resilient, climbing 0.5%, a bit below the forecast for a 0.6% gain, while personal income rose 0.2%, compared with the estimate for 0.3%. The reports come the day after the Fed voted to hold its benchmark interest rate in a range between 3.75%-4%. Despite elevated inflation readings, central bank officials insist they can afford to evaluate incoming data before deciding on their next move. "The period right in front of us is information rich. There is a lot that's happening in the world. My colleagues and I are keen to take notice of it," Fed Chairman Kevin Warsh said Wednesday. However, the data deluge from Thursday shows the Fed could have more work to do. A Labor Department report also released Thursday showed that layoffs remain low. Initial jobless claims edged lower to a seasonally adjusted 194,000 for the week ended Oct. 24, below the estimate for 200,000 and near levels last seen in the late 1960s. Stock market futures were negative following the releases while Treasury yields also fell. "Net, net, economic growth is powering ahead despite the uncertainty of geopolitical risks and the damage posed to many sectors of the economy by higher energy costs," said Chris Rupkey, chief economist at Fwdbonds. "The economy was thought to have been a lost cause during much of the current Administration's time in office, but real GDP has bounced back above a 3 percent run rate in Q3 2026 for the first time in a year."

Third-quarter U.S. GDP increases a better-than-expected 3.4% as September inflation accelerates
North America
CNBC Economy

European Central Bank keeps key interest rate on hold at 2.5%

The European Central Bank voted to hold interest rates steady on Thursday, meeting market expectations, despite euro zone inflation rising to a three-year high. It keeps the central bank's key rate, the deposit facility, at 2.5% following a 25 basis point hike in September. In a statement, the institution's Governing Council said rising energy prices posed upside risks to the inflation outlook and downside risks to growth, but that underlying inflation and wages were so far broadly stable. "At this point in time we are not seeing second round effects in addition to what is already included in the projections" released in September, ECB President Christine Lagarde told CNBC's Annette Weisbach during a press conference. Lagarde identified the main developments since the ECB's last meeting as higher energy costs across oil, petrol, fuel, gas and refining margins, and a sharp rise in long-term financing costs, with the average 10-year sovereign yield up by around 35 basis points. "If you combine these two factors — actually, the Governing Council debated whether a hike was appropriate — but on the basis of the uncertainty that accumulates and that rises as well, on the basis of underlying inflation that has broadly remained unchanged, the Governing Council unanimously decided that we were well positioned enough at this stage to hold and that a measured approach at this point in time remained appropriate," Lagarde said. Money markets were pricing in around a 67% probability of a rate hike in December following the announcement, according to LSEG data. Headline inflation in the euro area hit 3.8% last month, the highest level since September 2023. Energy price inflation reached 18.8% amid continued turbulence in the Middle East. The resurgence in energy price pressures following the outbreak of the U.S.-Israeli war with Iran in February saw the ECB hike rates in June for the first time since 2023. The euro area economy continued to expand in the third quarter of the year, with a recovery in services since the start of the Middle East conflict, the Governing Council said in an explanation of its decision Thursday. Manufacturing, digital services and exports are being boosted by AI-related investments, while government spending on infrastructure and defense is supporting business activity. However, energy price pressures are likely to hit consumer confidence as higher financing costs weigh on growth. In her press conference, Lagarde said the ECB would continue monitoring rising French borrowing costs and increased fragmentation that has spooked some market watchers.

European Central Bank keeps key interest rate on hold at 2.5%
North America
CNBC Economy

President of the European Central Bank Christine Lagarde to step down. Here's who is tipped to replace her

European Central Bank President Christine Lagarde will step down on Feb. 7 next year, she announced Thursday, formally kicking off a succession race that will be shaped by political bargaining and France's looming fiscal crisis. Lagarde has led the central bank since July 2019, steering its responses to the Covid-19 pandemic, the Russia-Ukraine war and a series of energy price shocks that sent inflation in the European Union above 11% in 2022. She will depart nearly nine months before her term was due to expire in October 2027, while the process to appoint her successor will begin immediately. Senior ECB figures are already in talks to fill other senior roles, with chief economist Philip Lane and executive board member Isabel Schnabel also due to step down next year. The ECB is institutionally independent, and its Governing Council comprises the six-member Executive Board and the governors of the 21 euro-area national central banks, whose voting rights rotate. But appointments to its top jobs are made by euro area governments, with negotiations generally reflecting political bargaining over national representation and influence. Former head of the Netherlands central bank, Klaas Knot, and former head of Spain's central bank, Pablo Hernández de Cos, are widely regarded as top contenders to replace Lagarde. "Both are excellent candidates," ING's global head of macro, Carsten Brzeski told CNBC by email on Thursday. "Nationality will also matter. While Knot might find more support among Northern European governments, the question is whether De Cos will be supported by the current Spanish government." "In any case, both would bring a high level of monetary policy expertise to the table. Something that Christine Lagarde had to pick up on when already in office." Berenberg Chief Economist Holger Schmieding said that as well as the usual issues of monetary policy competence and regional balance, the ECB would need to consider who could deal with potential financial turbulence amid widening spreads in bond yields between member states. Market participants are debating whether the ECB could be forced to use one of its intervention mechanisms as France faces a mounting sovereign debt crisis, with further uncertainty ahead due to next year's election.

President of the European Central Bank Christine Lagarde to step down. Here's who is tipped to replace her
North America
Fortune

Samsung and Google ruin the party: Earnings misses drive tech futures lower as the Fed signals rate hikes ahead

On President Trump’s “Liberation Day” in 2025, the U.S. tariff on Chinese goods rose to a potential 145%. The increase came just as Spirit Halloween began shipping goods from Asia. “This was going to put us out of business,” Steven Silverstein, CEO of Spirit’s parent company, Spencer Spirit Holdings, told Fortune’s Catherina Gioino. Silverstein said the tariffs were worse for Spirit than COVID. Up to 80% of Spirit’s merchandise is imported by the company, mostly from Asia, and it moves on a tight schedule through 63 third-party logistics sites before reaching more than 1,550 stores, a process Silverstein says runs all year. “Every day is critical to us,” he said. Spirit had to stop the ships. A group of executives set up a war room. “You start burning the furniture,” he said. “You have to preserve your cash.” Anthropic spent $2.75 million guarding Dario Amodei last year—more than 4 times his salary, but a fraction of Mark Zuckerberg’s security bill - Catherina Gioino The European Central Bank is unlikely to make emergency purchases of French government debt if the country cannot get its fiscal house in order. But it could be forced to, according to Oxford Economics, because French debt is widely held and a “market panic” might compel the ECB to prop up the euro in order to restore confidence in the E.U.’s single currency. In the estimation of Oxford’s lead economist Leo Barincou, “Our baseline sees France walking a tightrope over the next six months. Financing needs will reach record highs in 2027, and fiscal slippage, political instability, and election-related uncertainty will all add to market pressure. We expect these factors to push spreads [the premium demanded to hold French bonds over safer bonds such as those from Germany] towards 200 basis points, but that shouldn't trigger a full-blown crisis.” Nonetheless, if the market can’t see a solution coming after the election—neither Marine Le Pen nor Jean-Luc Mélenchon, the likely runoff candidates, have put forward proposals that the bond market will take seriously—“a more severe market panic, fuelled by self-reinforcing dynamics, can’t be ruled out,” Barincou said in a note. In that scenario, “the sheer urgency of the situation” would mean “the ECB would probably be forced to act because of the wider systemic risks tied to the amount of French debt held within the European financial system, as well as the risk that a French crisis would undermine confidence in the bloc's single currency.” Stocks were mixed in Asia and Europe this morning, but U.S. futures are pointing lower before the open in New York. The U.S. Federal Reserve held interest rates yesterday but signaled that interest rate hikes were likely in the future. “My blunt take is that there should have been a rate hike,” SoFi’s Liz Thomas told Fortune in an email. “Oil prices are likely to stay high as long as the war in Iran continues. That means inflation is likely to stay high too. … So it’s very possible we start hearing chatter about a 50 basis point hike in December if the Fed needs to play catch-up.” Fed chair Kevin Warsh also said he will hold fewer rate-setting meetings next year. UBS’s Paul Donovan—a Warsh critic—raised an eyebrow at that this morning: “Less policy flexibility at a time of economic and political turmoil is an interesting choice,” he told clients. Nasdaq futures were off by more than 1% this morning after Samsung and Alphabet reported Q3 earnings and both missed expectations. Samsung shares declined 4% in South Korea and Alphabet lost 10% in overnight trading. Samsung’s chipmaking division posted lower operating profit than expected.

Samsung and Google ruin the party: Earnings misses drive tech futures lower as the Fed signals rate hikes ahead
North America
CNBC Economy

Here are five key takeaways from the Fed rate decision and Warsh news conference

The Federal Reserve voted Wednesday to hold its benchmark interest rate steady. At the press conference that followed, Fed Chairman Kevin Warsh disclosed some of his thinking about where the U.S. economy stands, and how that affects monetary policy. But for Fed wonks, the big news may have been Warsh's disclosure of some procedural changes ahead. "The Fed is leaning into patience. It seems they prefer to wait for more information on the appropriate level of rates, as uncertainty reigns supreme in light of recent geopolitical developments." —Phil Camporeale, chief investment strategist, JPMorgan Wealth Management. "The Fed has time on its side ... But the direction of travel remains clear. The Fed is still taking back some of last year's rate cuts, and the two dissents underline that tightening bias. We expect a hike in December and another in early 2027." — Seema Shah, chief global strategist, Principal Asset Management. "We hesitate to characterize his communication as particularly dovish or hawkish ... The bottom line is that the Fed policy reaction is not a black-and-white, binary thing ... The market has adjusted to Warsh's communication style, but there might be a ways to go before they are fully on the same page." — Thomas Simons, chief U.S. economist, Jefferies. Get this delivered to your inbox, and more info about our products and services. Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Here are five key takeaways from the Fed rate decision and Warsh news conference
North America
CNBC Economy

Euro zone economy slows to 0.4% growth in Q3 as crisis-hit France contracts

Economic expansion in the euro zone slowed to 0.4% in the third quarter, statistics agency Eurostat said on Friday. The 21-nation euro area rebounded to 0.6% growth in the second quarter, following stagnation in the first three months of the year. The flash third quarter reading was nonetheless higher than the 0.2% growth that was forecast in a Reuters poll of economists. However, France's economy unexpectedly contracted by 0.1% over the July to September period. The country is grappling with soaring borrowing costs as investors balk at a political struggle to reduce its high budget deficit and mounting national debt. October has also brought growing nationwide unrest over the cost of living and other issues, which has at times escalated into violent and costly rioting. Germany, the euro zone's largest economy, grew by just 0.2% in the third quarter. Growth in the bloc's third-biggest economy, Italy, was flat. Spain — recently rocked by its own mass protests over cost pressures and housing, leading to a snap election being called for next month — grew by 0.6%. The country continues to outpace the euro area average amid labor market productivity, a healthy tourism industry and domestic demand, and a relatively strong fiscal position. Ireland recorded 5.5% growth, though its headline GDP figures are highly volatile and subject to revision due to the large number of multinationals stationed in the country but doing business outside of it. The European Central Bank voted to hold interest rates steady on Thursday, saying a shock from higher energy prices was not yet feeding into second-round effects in the wider economy. But analysts said the ECB may still opt for one more rate hike in December as energy costs remain elevated. The euro area is "showing unexpected resilience against a backdrop of considerable economic and geopolitical uncertainty," Joe Nellis, head of economic research at accountancy MHA, said. However, he cautioned that this may be masking longstanding structural challenges, including weak productivity growth and investment expenditure, demographic pressures and declining industrial competitiveness. "The outlook for 2027 is complicated by the prospect of further inflationary pressures. Unless the Middle East crisis is resolved in the very near future, energy and transportation costs will continue to rise, putting even more pressure on the cost of living and household finances at a time when consumer confidence is weak." Get this delivered to your inbox, and more info about our products and services.

Euro zone economy slows to 0.4% growth in Q3 as crisis-hit France contracts
North America
Fortune

‘It’s only when you see 49-ton trucks in China running on batteries that you realize how serious electrification is’: Octopus Energy CEO Greg Jackson on Europe’s incumbency problem

The brutal business of selling mirrors is not for the faint-hearted. The challenge is category differentiation, given that a mirror has one simple task—reflection. One of Greg Jackson’s first jobs was working for a mirror manufacturer which, at best, broke even or made a small profit. And then he had an idea. “We started making mirrors that had really wide frames,” the founder of Octopus Energy (the U.K.’s largest energy provider) told me. “And on a picture [on the internet], suddenly we had a mirror that looked different from everybody else’s. And they sold like hotcakes – and that transformed the business.” Approaching a business from a different point of view is an essential ingredient in the hunt for innovation. Jackson’s essential insight when it came to mirrors was that, online, every product looked the same. That is what the customer saw. And he realized that if the customer saw something different (a mirror with a wide frame), they might buy it. Which they did. Not seeing something that is obvious to an outsider is a firm’s “incumbency cost”— embedded in the regular behavior of doing the same thing tomorrow as you did yesterday. It is one of the most significant brakes on the ability to grow. “I think the single biggest factor affecting Europe—and an issue the U.S. is not immune to—is incumbency,” he told me. “China and the Gulf are not held back by incumbent industries. Instead they are, at huge pace, delivering the new world. If I look at electric vehicles as an example, there’s not an incumbent car industry in China that’s struggling to manage the transition to an entirely new technology. But if I look at Europe, European governments and consumers want electric vehicles, but the European car companies have not yet been able to be competitive at building them.” Chinese electric vehicle sales in Europe are growing rapidly. Chery has tripled sales in Europe in the past year, BYD has doubled, Geely is up a third, and SAIC is up 23%. Taking the four leading Chinese car makers together, their EV market share is now at 14.6%, up from 9.6%, according to the latest figures from the European Automobile Manufacturers’ Association. In response to claims of state subsidized dumping by China, the European Union has applied duties of up to 35% on top of the standard 10% import tariff. Chinese cars are still over 20% cheaper to buy. “Incumbents crowd out the innovators in many sectors and markets,” Jackson said. “It wasn’t the Post Office [the U.K.’s public mail service] that invented email. The music industry held back streaming and digital music for 10 to 20 years. What you need is routes to market for new technologies, and I think that can be a challenge in Europe because so many of the big industries essentially have a stranglehold on policy. “Economists have said that nearly all productivity growth comes from new companies. If we want more growth, we need to allow creative destruction so new companies can deliver the productivity we need.” Jackson said that Europe has a number of successful sectors that it can learn from—for example, the continent enjoys a vibrant and innovative fintech sector whereas in America “they take my card around the back of the bar because their terminals and processes are so dated.” Few people have seen a check in Europe in more than a decade. Octopus grew out of the need for a new way to manage energy supply and demand. Jackson initially attempted to convince legacy businesses that they would be far more efficient with a fully overhauled technology platform but, after not progressing very far, decided that he could build a team that could modernize more quickly. “The idea was that through technology, we would be able to provide lower costs because we’d be more operationally efficient,” he said. “We’d be more agile, so we can incorporate technologies like electric vehicles and solar panels and batteries directly into the energy system very efficiently. That would also help with cleaning up energy because you can use more renewables more cost-effectively if you’re more agile. We set out building that company in 2015, and nine years later, we became the biggest energy company in the UK, overtaking all the incumbents. “We came from outside energy, we came from tech, and just like the people that built Uber didn’t come from personal transportation, and the people that built Airbnb didn’t come from hospitality, and the people that built Amazon didn’t own bookshops. What we were able to do is build an energy company not based around the assumptions of the industry, but using technology to meet the needs of customers.”

‘It’s only when you see 49-ton trucks in China running on batteries that you realize how serious electrification is’: Octopus Energy CEO Greg Jackson on Europe’s incumbency problem
North America
Fortune

The $6.3 billion Binance hack: What we know so far about the biggest crypto heist in history [Updated]

The crypto world is reeling after a hacker drained billions of dollars from Binance, the world’s largest digital currency exchange, on Thursday. The full details of the hack are still emerging, but the broad strokes of what happened are becoming clearer, as everyone from security researchers to Elon Musk to the company itself weigh in on the incident, which was almost certainly carried out by North Korea. (This story was updated on October 30 at 4:30pm ET with additional information). Binance posted on X late Thursday evening Eastern Time, stating that a compromised developer laptop is partly to blame for the catastrophe, which is by far the biggest security incident in an industry that has been plagued by hacking since its earliest days. The company plans to provide more extensive details, and in the meantime, many other big crypto firms—including its biggest rivals—have rushed in to aid Binance. Here is a detailed look at what we know so far about the nature and scope of the hack, and what is likely to happen next. Reports of a hack began surfacing on X early on Thursday afternoon. That’s when crypto observers, referring to public blockchain data, pointed to large amounts of currency moving out of wallets associated with Binance. Soon after, company cofounder Changpeng Zhao confirmed the hack. In its post on Thursday evening, Binance stated the hacker appeared to have gained control of a laptop belonging to an employee or a contractor. The company wrote that the “initial investigation suggests that the security incident may involve a compromised DevOps engineer’s laptop, which allowed an attacker to gain access to a service container and submit unauthorized withdrawal transactions.” Since that posting, crypto and security researchers have noted that the hackers essentially hijacked internal Binance wallets in order to “sweep” the funds to external wallets they controlled. They did this by using features of the Ethereum protocol that also let them help cover their tracks and lock out Binance security teams. Mid-day Friday, Binance co-CEO Richard Teng provided an additional update saying the attack was more pervasive than one laptop. He wrote: “This was not carried out by one person. Our initial investigation suggested that the security incident may have involved a compromised laptop, however our subsequent investigation has uncovered additional points of breach. This was a complex attack. The attacker also used a self-destruct mechanism that destroyed tooling and traces as they went, making it more difficult for us to trace and investigate.” Reports on X have suggested the hacker made off with anywhere from $2 billion to $8 billion, but in its post, Binance said the estimated total impact sits at around $6.3 billion. The situation is still fluid, and it could be days before the scope of the hack is finally determined. Early reports say the hacker took $1.5 billion in Bitcoin and around the same amount in the stablecoin Tether, and slightly under a billion dollars worth of Ethereum and the USDC stablecoin. It is likely the hacker stole various other currencies, too. No one has claimed responsibility for the hack, and Binance has not pointed to a specific culprit, but security firms TRM and Chainalysis have both said North Korea is almost certainly behind it. This theory is highly plausible given that the North Korean military has long used crypto hacking to help fund its operations. The sophisticated nature of the hack, which included efforts to move the funds after they were stolen, is also consistent with the tactics of North Korea. For now, though, there is no definitive proof the country is responsible. Soon after news of the hack became public, Tether and Circle—the firms responsible for minting USDT and USDC, respectively—announced they would freeze any stablecoins tied to the hack.

The $6.3 billion Binance hack: What we know so far about the biggest crypto heist in history [Updated]
North America
CNBC Finance

Rivian third-quarter earnings beat estimates as software revenue, R2 deliveries rise

Rivian Automotive beat Wall Street's third-quarter earnings expectations as it ramped up production of its new R2 entry-level SUV that the company has promised investors will lead it to profitability. Here's how Rivian performed in the period ended Sept. 30, compared with average estimates compiled by LSEG: Shares of Rivian were up roughly 7% during afterhours trading Thursday, after hitting a new 52-week low of $11.38 earlier in the day. The stock closed at $11.45 a share, down 1.9% The electric vehicle maker also revised its 2026 guidance to mark expected improvements in its vehicle deliveries, pre-tax adjusted earnings and capital expenditures. The new guidance calls for a pre-tax adjusted loss of between $1.75 billion and $1.85 billion — a $100 million improvement at the midpoint from its prior guidance — vehicle deliveries of between 67,000 and 70,000 units, up from at least 65,000; and capital expenditures of between $1.4 billion and $1.5 billion, $300 million less at the midpoint. Rivian attributed the improvement in its pre-tax adjusted earnings guidance to better-than-expected revenue related to its sales of regulatory credits, an IEEPA tariff refund receivable in the third quarter and its expected increase in vehicle deliveries. The R2 — the first deliveries of which arrived to customers in June — has become Rivian's best-selling model and was responsible for "much of the gain quarter-over-quarter," the company said. Rivian delivered a record 19,248 units from July through September. The company does not disclose deliveries by vehicle. The EV maker remains unprofitable overall but continued to narrow its losses during the quarter. The company reported a net loss attributable to common stockholders of $913 million, compared with a loss of $1.17 billion during the third quarter of 2025. Rivian's gross profit, which is closely monitored by investors, was $176 million during the third quarter, up from $24 million a year earlier. Its adjusted earnings before interest, taxes, depreciation and amortization was a loss of $435 million, a $167 million improvement from the same period last year. The company reported that its software and services segment continues to grow, generating $605 million in revenue and a gross profit of $256 million, a 42% margin. That compares to its automotive operations, which recorded nearly $1.55 billion in revenue and a gross loss of $80 million. Also on Thursday, Rivian reiterated that it expects the R2, a smaller and less expensive sibling to its current luxury R1S SUV, to have a positive gross margin by the end of the year. CEO RJ Scaringe has said the company needs to scale beyond current R2 production plans of 160,000 units in order to achieve overall profitability.

Rivian third-quarter earnings beat estimates as software revenue, R2 deliveries rise