In the week that concludes, the economic data further important in the United States before the presidential elections on November 5, whose results are unpredictable as suggested by polls on voting intentions, which show a very close race.
The latest data from the world’s largest economy allows American voters to compare the overall US economic outlook with their personal financial situation, which has been weakened by high borrowing costs.
According to surveys, voters’ perception differs from the good symptoms of the American economy, which favors Republican candidate Donald Trump.
The indicators published in the week show that during the third trimester of the year the rate of growth of economic activity in the US stayed solid and it was similar to that of the previous three months.
Expressed as an annualized quarterly rate adjusted for seasonality, the US GDP expansion was 2.8 percent in the July-September 2024 period, after growing 3.0 percent in the previous quarter, according to figures from the Office of Economic Analysis.
The growth was a reflection of household purchases accelerated ahead of the elections and the federal government increased defense spending.
U.S. consumer spending, which makes up the bulk of economic activity, rose 3.7 percent, its biggest increase since early 2023 and much higher than the previous 2.8 percent.
Exports and public spending rose 8.9 and 5.0 percent, respectively, exceeding the second quarter’s gains of 1.0 and 3.1 percent, in that order.
Inflation in the US calculated based on the personal consumption expenditure or PCE price index, which is the Federal Reserve’s preferred measure of inflation, is confirming signs of moderation.
In September it registered an annual increase of 2.1 percent, slowing from 2.3 percent in August and reaching its lowest level since the beginning of 2021.
In addition to being in line with market forecasts, it was close to the 2 percent inflation target of the US monetary authorities.
For its part, the underlying index, which excludes the most volatile components such as food and energy prices, remained at 2.7 percent annually for the third consecutive month, according to data from the Bureau of Economic Analysis.
Although annual inflation of the core component has remained relatively stable since May, it is below the levels recorded at the beginning of the year.
This Friday, the Bureau of Labor Statistics reported that In October only 12 thousand jobs were created in the USthe lowest pace of worker hiring since December 2020.
The distortion in labor market data It reflected the impacts of powerful hurricanes Helene and Milton, which hit the southeastern United States in late September and early October, as well as the strike at Boeing, which is approaching its second month and is having an impact on the US economy.
Regarding the evolution of economic activity in Mexicoin the period July-September 2024 the appropriate figure the preliminary of the GDP record an annual expansion of 1.5 percent and a 1.0 percent to keep quiet quarterly seasonally adjusted.
Although in both measurements there was greater growth than expected for the Mexican economy, data does not deviate from deceleration trajectory of the national activity observed since the end of 2023 and that will extend to the end of 2024 and the beginning of 2025.
In addition to the expectation of lower growth at the local level in an environment of greater uncertainty associated with external and internal factors, GDP figures reflect a decoupling between the economies of EU and Mexico.
The high uncertainty in the country is related to the abrupt change in the institutional framework of various sectors, but markedly in the Judicial Branch.
We must not downplay the importance of the decoupling between US growth and Mexicowhich is still the market emergent who benefits the most of the American economy.
Interview Between Time.news Editor and Economic Expert
Time.news Editor (TNE): Good morning! Today, we’re diving deep into the current state of the U.S. economy with our expert, Dr. Jennifer Lawson, a renowned economist and political analyst. Welcome, Dr. Lawson!
Dr. Lawson (DL): Thank you for having me. It’s a pleasure to be here!
TNE: The U.S. economy is showing signs of strength with a GDP growth of 2.8% in the third quarter. However, polls suggest a tight race as we approach the presidential elections. What do you make of this paradox?
DL: It’s quite fascinating, isn’t it? On paper, the economy appears strong, with consumer spending up 3.7%, the highest increase since early 2023. This usually bodes well for the incumbent party. Yet, voters’ experiences with high borrowing costs and personal finances are clouding their perceptions. It’s a classic case of economic metrics not aligning with individual realities.
TNE: That’s a great point. The high borrowing costs and consumer sentiment certainly play a crucial role in shaping opinions. We see Republican candidate Donald Trump benefitting from this disconnect—how significant do you think this could be in the elections?
DL: Very significant. Economic considerations often outweigh political allegiance when it comes to voters. Many people may feel that the economic indicators do not reflect their financial struggles, leading to a possible vote for change. The historical trend shows that voters tend to favor candidates who resonate with their immediate concerns, which could benefit Trump given the current dissatisfaction over personal finance.
TNE: Speaking of dissatisfaction, let’s talk about inflation. The PCE price index shows signs of moderation, sitting at 2.1%. How do you view this stabilization in inflation?
DL: It’s definitely promising. The Federal Reserve has targeted an inflation rate around 2%, and with the recent moderation from 2.3% in August, it’s a sign that their measures may be having an effect. However, the core inflation rate remains stuck at 2.7%, which indicates that while we might be heading in the right direction, there are still persistent inflationary pressures, particularly in volatile sectors.
TNE: Indeed. And it seems like the labor market is also showing some troubling signs, with only 12,000 jobs created in October—the lowest since December 2020. What does this indicate about the broader economic landscape?
DL: The jobs report is concerning. It signals potential weakness in hiring and could point to a broader slowdown in economic activity. This could reflect employers’ hesitance in a turbulent economic climate, where higher interest rates impact their outlook. If job growth doesn’t pick up, it could exacerbate voters’ doubts about the economy ahead of the elections.
TNE: So, how crucial is consumer sentiment leading up to November 5?
DL: Extremely crucial. Consumer sentiment has a direct impact on economic growth as it drives spending, which ultimately fuels GDP growth. If majority feeling is that things are getting worse rather than better, we could see a significant dip in consumer spending leading up to the elections, which would not only impact the GDP but also could shift voter support dramatically.
TNE: What would be your advice for voters as they gauge their choices with the upcoming elections amidst all these economic signals?
DL: Voters should consider the broader economic context rather than just their personal finance situation. While individual experiences are valid, understanding the economic indicators and more comprehensive perspectives on policy implications is essential to making informed decisions come election day.
TNE: Thank you for those insights, Dr. Lawson. This conversation really highlights the intricate relationship between the economy and political sentiment. We appreciate you sharing your expertise with us!
DL: Thank you! It was great to discuss these important issues with you.
TNE: And thank you for tuning in. Stay informed and see you next time!