By Fatma Younis
With the November 3 midterm elections days away, the federal government has released the final major economic data before voters head to the polls. The figures paint a contradictory picture: inflation remains stubbornly above the Federal Reserve's target and consumer sentiment has plunged to near-record lows, yet the economy continues to expand at a solid pace and the labor market, though volatile, keeps adding jobs.
Inflation Weighs on Consumers
Prices rose at an annual rate of 3.7% in September, more than a percentage point above the Fed's 2% target. The University of Michigan's monthly survey shows consumer sentiment at its second-lowest level in 74 years. An ABC News/Washington Post/Ipsos poll found half or more Americans describe every household purchase category as "unaffordable," with 71% calling gasoline unaffordable — up from 28% in February before the war in Iran drove up fuel costs. The average price of regular unleaded gasoline stood at $4.22 a gallon on Thursday, $1.19 higher than a year ago, while diesel averaged $6.33, a $2.65 increase.
Economic Growth Boosted by AI Spending
Despite inflation pressures, the economy grew at an annualized rate of 3.4% in the three months ending in September, accelerating from 2.2% and 2.5% in the prior two quarters. A surge in artificial intelligence spending contributed an average of 0.56 percentage points to GDP growth in each of the first two quarters, accounting for more than 20% of overall expansion, according to a J.P. Morgan Asset Management study. Consumer spending, which drives about two-thirds of economic activity, surged 0.9% in August, the fastest monthly rise since March.
Job Market Volatile but Unemployment Low
Employers added an average of about 68,000 jobs per month over the first nine months of the year, up from an average of 10,000 in 2025, according to the Atlanta Federal Reserve. However, monthly gains have swung dramatically: 29,000 jobs were added in September, down sharply from 133,000 in August, which itself followed a loss of 10,000 jobs in July. The yearly unemployment rate has held at 4.4% or lower since 2017, excluding the pandemic years of 2020 and 2021.
Trump Touts Growth at Rally
Speaking at a rally in Corinth, Mississippi, on Monday, President Donald Trump declared the U.S. economy was experiencing "unbelievable growth, the biggest growth in the history of our country." He acknowledged rising oil prices but said the war with Iran had been worth it to prevent Iran from acquiring a nuclear weapon, adding he had been prepared for even higher oil prices.
