The pace of US economic growth slowed over the summer but continued its two-year expansion, according to data released on Wednesday, days before millions of voters decide whether Kamala Harris or Donald Trump is best placed to lead it forward.
US gross domestic product (GDP) – a broad measure of economic health – rose by 2.8% in the third quarter, short of economists’ expectations of 3.1%, and down from the previous quarter’s 3% reading. The increase was driven primarily by consumer spending, exports and federal government spending.
US policymakers scrambled to bring down inflation from its highest level in a generation two years ago. The Federal Reserve rapidly increased interest rates to tamp down prices in a move that economists feared risked tipping the world’s largest economy into recession. Such effects failed to materialize.
“Despite earlier fears that the US economy was headed for recession, growth continued to outperform,” said Paul Ashworth, chief North America economist at Capital Economics. “Overall, the US economy appears to be doing just fine.”
US economic growth has been surprisingly resilient under Joe Biden, with only one quarter – the first of 2022 – in decline, as the shockwaves of the Covid-19 pandemic continued to rattle the global economy.
Inflation has fallen from a generational high of 9.1% in June 2020 to an annual rate of 2.4% in September, its lowest rate in over three years.
But many Americans still aren’t feeling it. Almost half wrongly believe the US is in recession, according to a Harris Poll conducted exclusively for the Guardian last month. Years of rising prices continue to take their toll.
In a speech in Washington on Tuesday, Harris once again tried to allay voters’ fears. The Democratic candidate for president promised to assist first-time homebuyers, ban price-gouging at supermarkets and cap the price of insulin. “I will deliver tax cuts to working people and the middle class … I will lead in honoring the dignity of work,” she said.
Trump has sought to portray the Biden administration as a “destroyer” of jobs, despite US employers adding millions of jobs in recent years. Harris, Biden’s vice-president, has acknowledged that the cost of living remains “just too high” for many, and has pledged to take action to help.
The latest GDP report was released ahead of closely watched jobs data for October, out on Friday, the last employment report before the election. Economists expect the economy to have added about 125,000 new positions over the month. That figure would be a sharp drop from the 250,000 jobs added in September, when hiring unexpectedly accelerated, and will probably reflect the strike at Boeing and the impact of Hurricanes Helene and Milton.
But there are signs that the US’s resilient jobs market may also shake off last month’s disruptions.
On Wednesday ADP, the US’s largest payroll supplier, said private companies hired 233,000 new workers in October, the best month for job creation since July 2023, up from 159,000 in September and far ahead of the estimated 113,000.
“Even amid hurricane recovery, job growth was strong in October,” ADP’s chief economist, Nela Richardson, said. “As we round out the year, hiring in the US is proving to be robust and broadly resilient.”
