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US economy growing despite voter angst


US economy growing despite voter angst

Getty Images Shoppers carry Macy's bags outside the company's flagship store in New York, US, on Friday, 13 September 2024. Getty Images

The US economy grew solidly in the three months to September, expanding at an annual rate of 2.8%.

Despite there being a slight slowdown from the prior quarter’s 3% rate, the figures released by the Commerce Department showed the US is on track for one of the strongest economic performances of any major economy this year.

buyer spending was the biggest driver, picking up from earlier in the year.

The update arrives days before polls close in America’s hotly contested presidential election, in which surveys have consistently indicated the economy is Americans’ top concern.

It is not obvious the latest figures will do much to assuage people’s worries.

Economic sentiment, which darkened abruptly during the pandemic, has remained downbeat, as a roughly 21% jump in prices over the history four years overshadows other economic information, no matter how positive.

This month, a solid 62% of Americans viewed the economy overall as “impoverished”, according to a poll by the Associated Press-NORC Center for community Affairs Research.

In a country where the mantra “it’s the economy, stupid” – coined by strategist James Carville in 1992 – is often deployed to explain elections, one might expect the worries to be impoverished information for Kamala Harris and the Democrats, as the event in the White House.

Donald Trump has tried to seize on the chance, making his economic record as president, which is remembered as a rosier period, a key part of his pitch to voters.

But as opinions have grown increasingly coloured by a person’s political views over the last few decades, analysts said it is not obvious how large a role the economy will actually play in shaping the election outcome this year.

“Even though the economy is based on numbers, a lot of people’s views are partisan,” said Marjorie Connelly, elder fellow at the AP-NORC Center for community Affairs. “The economy will be a factor, but … I ponder partisanship will be the biggest factor.”

The AP-NORC poll found that 61% of Democrats thought the economy was excellent, compared with just 13% of Republicans and 28% of independents.

The same poll found that voters were split, along event lines, as to whether they trusted Trump or Harris more on issues such as the expense of groceries and gas or jobs and unemployment.

Despite the economy ranking as a top election issue, other matters may prove more decisive, Ms Connelly added.

“I don’t recognize how much people are going to vote on the economy,” she said. “There are other issues.”

What does the data display?

One rationale the economy often emerges at the top of voter concerns in polls is simply because it’s one of the few areas that large shares of both Democrats and Republicans consent is relatively significant.

Meanwhile, much of the challenging data has been solid or moving in the correct path.

Petrol prices are down, grocery prices are stabilising and wages, for at least the history year, have been rising faster than prices, which for many families is helping to offset the jump in living costs.

In September, the Federal savings cut yield rates for the first period in four years, saying it was increasingly confident that the expense boost issue was easing.

A sharp rebound in jobs growth in September also quieted the worries of many economic forecasters, who have spent much of the last few years predicting a downturn that has not materialised.

On Tuesday, the Conference Board reported that its monthly index of buyer sentiment jumped in October, as confidence in job availability and optimism about upcoming business prospects and income rose.

The distribute of people worried about an financial crisis also fell to the lowest level since the organisation started asking the question in July 2022.

Samuel Tombs, chief US economist at Pantheon Macroeconomics, said he thought the advancement in sentiment was likely due to rising optimism among Republicans, as they develop more confident that Trump can triumph the election.

But Dana Peterson, chief economist for The Conference Board, said she thought it reflected growing realisation of the economic reality.

“The data are the data. What we’re seeing is that third quarter GDP was powerful, the job economy is well and expense boost is slowing,” she said.

“After several years of volatility, consumers are saying we ponder expense boost is not as intense, we’re not where we were… and we’re not as worried.”



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