The economy grew at an inflation-adjusted 3.4% annual rate in the third quarter, adjusted for seasonal variations, the Bureau of Labor Statistics reported in a preliminary estimate of gross domestic product.
The reading, which is the first of three estimates for third-quarter GDP, indicates that economic growth increased from the second quarter of this year, which clocked in at a 2.2% rate. The growth rate was 2.5% in the first quarter.
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The stronger GDP growth is a positive economic data point that the Trump administration can point to with less than a week left until the midterm elections.
Growth was also stronger than the 3.2% rate economists had anticipated.
Still, the latest numbers come as President Donald Trump and Republicans have struggled with poor economic approval ratings thanks to high inflation. Trump entered office promising to lower prices after years of too-high inflation under former President Joe Biden, but price growth of many goods and services has remained stubbornly high.
But other economic variables like GDP and the labor market have been more favorable to the president.
Steady GDP growth also offers the Federal Reserve some leeway as it attempts to drive down inflation.
The Fed’s goal is 2% inflation, and it has been years since that target has been reached.
Fed Chairman Kevin Warsh, who was appointed by Trump earlier this year, spoke about GDP during a press conference in Washington on Wednesday after the central bank announced that it would hold interest rates steady.
“Economic growth has strengthened,” Warsh told reporters. “Capital expenditures are at a historically high share of GDP. High-tech investment is leading the acceleration.”
Despite the economy’s solid expansion this year, voters have expressed extreme dissatisfaction with the economy. Consumer sentiment hit the second-lowest reading on record this month, lower than during the Great Recession.
In fact, a recent survey by Harris Poll and the Guardian found that 61% believe the U.S. is in a recession, despite the economy technically not being near recession territory.
There isn’t a single government agency that has the authority to declare a recession. Instead, those in government and most economists look to the National Bureau of Economic Research, a private group, to declare one.
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NBER defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months,” although there has been a historical precedent of labeling two consecutive quarters of negative economic growth recessionary. The periods feature rising unemployment.
The last recession was a very brief yet sharp downturn at the outset of the pandemic in 2020. And before that, the U.S. economy was in the Great Recession from 2007 to 2009.
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[ H/T Washington Examiner ]
