Economic Data Reveals Mixed Signals Ahead of Nov. 3 Midterms

The U.S. economy presents a divided picture to voters heading to the polls on Nov. 3, with official data showing strong growth alongside persistent price pressures that have strained household budgets.

Federal government data released this week indicates the economy expanded at an annualized rate of 3.4% over the three months ending in September. This figure represents an acceleration from the 2.2% growth recorded in the first quarter and the 2.5% growth in the second quarter. The expansion is roughly in line with the economic performance recorded in 2025.

The surge in spending on artificial intelligence has contributed to this growth. A study by J.P. Morgan Asset Management found that the AI sector added an average of 0.56 percentage points to GDP in each of the first two quarters of this year. That contribution accounted for more than 20% of total economic growth during that period.

Consumer spending has also held steady. Data from the federal government shows spending rose 0.9% in August, marking the fastest monthly increase since March. Consumer spending represents about two-thirds of all economic activity in the United States.

Despite this growth, inflation remains a central concern for many Americans. Prices rose at an annual rate of 3.7% in September, according to federal data. This rate is more than a percentage point higher than the Federal Reserve's target of 2%. Wages began to fall behind inflation in April, reducing the spending power of workers' take-home pay.

The war in Iran has exacerbated fuel costs. The average price of a gallon of regular unleaded gas stood at $4.22 on Thursday, which is $1.19 higher than the price at this time last year. Diesel fuel averaged $6.33 per gallon, a $2.65 increase compared to the previous year, according to AAA.

A poll by ABC News, The Washington Post, and Ipsos found that a majority of respondents described every household purchase category measured as unaffordable. Specifically, 71% of respondents called gasoline unaffordable, up from 28% in February before fuel costs rose due to the conflict in Iran.

The University of Michigan's monthly survey, released last week, shows consumer sentiment is at the second-lowest level ever recorded in the survey's 74-year history. Shoppers in that survey expect inflation to rise further over the next year.

The labor market shows signs of both strength and volatility. Employers added an average of 68,000 jobs per month over the first nine months of this year, according to an analysis by the Atlanta Federal Reserve. This pace is an improvement from the average of 10,000 jobs added monthly in 2025. However, monthly figures have fluctuated widely. The Bureau of Labor Statistics reported that employers added only 29,000 jobs in September, a sharp drop from the 133,000 jobs added in August. That August figure was a major jump from the 10,000 jobs lost in July.

President Donald Trump addressed the economic conditions at a rally in Corinth, Miss., on Monday. He described the U.S. economy as experiencing "unbelievable growth, the biggest growth in the history of our country." Trump acknowledged the rise in oil prices but stated that the war with Iran was necessary to prevent the country from acquiring a nuclear weapon. He said he was prepared for the price of oil to go higher than it did. The yearly unemployment rate has remained at 4.4% or lower since 2017, with the exception of the pandemic years in 2020 and 2021, according to the BLS.