There was mostly good news in the headline GDP number of 3.4% for the third quarter of 2026.  We’re most excited about the blockbuster blowout number in investment, which jumped 12.7%. Equipment investments were up 20.9%, led by computer purchases.

Investment is the mother’s milk of productivity growth and higher incomes. It is absolutely on fire and growing at the fastest pace in 6 years, clearly accelerating since full business expensing was reinstated and made permanent last year in the Big Beautiful Bill.

We also strongly suspect these blowout investment numbers are happening because of the big spend out from tech companies that need state-of-the art data centers.

So what’s the bad news? Government spending soared last quarter, which artificially lifted the headline GDP number. If we had it our way, we would count government spending as a negative, not a positive for the economy.