(TNND) — The U.S. economy continued to grow in the third quarter of this year, according to a report released Wednesday by the Commerce Department.
Gross domestic product, a broad measure of the U.S. economy, rose 2.8% from a year earlier.
This was down slightly from 3% in the second quarter, and down slightly from 4.4% in the third quarter of the same period last year.
Colorado State University economist Stephen Weiler said 2.8% annual growth is consistent with long-term economic expansion and should not lead to inflation.
“I’m turning up the heat on the stove, but it’s not getting too boiling,” he said.
The Commerce Department also reported that inflation, as measured by the Personal Consumption Expenditure Price Index, rose at an annual rate of 1.5% in the third quarter. This is below the US Federal Reserve’s inflation target of 2%.
The Fed has raised its benchmark interest rate 11 times from 2022 to 2023 as a measure to curb inflation.
The Fed finally reversed course last month, cutting its benchmark interest rate by half a percentage point as inflation continues to cool and concerns about the labor market grow.
Inflation, as measured by PCE, rose by 3.6% last year and by 7.1% in 2022.
A recent Gallup/Bankrate poll found that the economy is the No. 1 issue on voters’ minds this election, and their top economic concern is inflation.
Americans felt better about their finances and the economy in October, as the Conference Board’s Consumer Confidence Index posted its highest monthly increase since March 2021.
However, there are significant differences between parties in their perceptions of the economy.
A recent poll conducted by The Associated Press-NORC Center for Public Affairs Research found that only 38% of voters believe the nation’s economy is doing well.
The survey found that 85% of Republicans believe the economy is doing poorly, compared to 61% of Democrats.
“We think in general (the economy) is good, but it’s not. Unfortunately, even a good economy doesn’t necessarily support people who are in need or unemployed. ” Weiler said.
He cited the growing number of “disengaged workers” and long-term unemployed Americans.
He also noted how unemployment rates are higher for people without a high school or college degree compared to college graduates.
“I can understand why some people see the economy as not doing well,” he said.
elections and economy
With the election less than a week away, economists and policy experts are closely watching the plans of both Vice President Kamala Harris and former President Donald Trump.
A New York Times/Siena College poll found that 52% of people trust President Trump to run the economy, compared with 45% for Harris. Shown.
But neither candidate has a plan to address our nation’s growing debt burden, according to the nonpartisan, nonprofit Committee for a Responsible Federal Budget.
The group analyzed the economic plans of both campaigns and said both would actually increase the national debt.
Harris’ plan would increase debt by $3.95 trillion by 2035, according to the CRFB.
The group says President Trump’s plan would increase debt by $7.75 trillion.
The CRFB emphasized that its estimates contain significant uncertainty.
And, of course, both presidents will have to work with opposing members of Congress to pass economic legislation.
Harris campaigned on the idea of the “opportunity economy.”
According to the CRFB, her proposals include significantly expanding the child tax credit and other personal tax credits, increasing support for housing and health care, expanding Medicare, lowering taxes on tips, and strengthening border security. That’s what it means.
President Trump will amend and extend the Tax Cuts and Jobs Act, further reduce taxes for corporations and small businesses, increase military spending, strengthen border security, expand deportations and immigration enforcement, and expand housing, health care, and long-term assistance. I am proposing. Be careful, CRFB said.
The Penn Wharton budget model estimates that Harris’ tax and spending proposals would increase the primary deficit by $1.2 trillion over the next 10 years.
PWBM estimates that President Trump’s tax and spending proposals will increase the primary deficit by $5.8 trillion over the next 10 years.
President Trump wants to impose new tariffs on imported goods.
“I took hundreds of billions of dollars in taxes and tariffs from China, but no inflation,” President Trump said in his economic policy speech last month. “There was no inflation at all, it was 1.2%. There was basically no inflation. I think the last four years have been the highest inflation in our (country’s) history. Someone said, ‘No. “Sir, it’s only been 58 years,” he said. Well, that’s pretty bad too. I think it’s right in the history of our country. ”
Weiler said the idea of huge tariffs worries economists.
Just as inflation is declining, Weiler said new tariffs could reverse that progress.
“Because everything becomes more expensive,” he said. “All goods and services. Businesses aren’t paying (high) tariffs. They passed most of it on to consumers.”
Huge tariffs also invite retaliation from other countries, he said.
According to the Japanese government, the United States is the world’s second largest exporter of goods after China.
Weiler said the trade war could reduce economic activity by shrinking the export sector.
Tariffs can raise government revenue, but if the economy isn’t growing that fast, they won’t bring in as much tax revenue, he said. And the benefits of tariffs could be automatically canceled, he said.
“Notice how you don’t hear much about debt, you don’t hear much about increasing government revenue. … It comes down to a more statist approach,” Weiler said. Ta.
American University economist Robert Brecker said in a published analysis that President Trump imposed many tariffs in his first term and hopes to impose even more in his second term. , said that includes tariffs of 10% to 20% on all imports and up to 60% on U.S. goods. China.
Mr. Brecker said foreign countries would not pay for the increased tariffs.
Brecker said wholesalers, retailers and distributors absorbed some of the tariff costs through lower profit markups during Trump’s term.
The company also avoided tariffs by moving its procurement to countries that do not impose tariffs.
At the time, Americans didn’t really see a significant increase in consumer prices.
But Brecker said new tariffs, especially if they are large and apply to all imports, are much more likely to drive up prices for consumers.
Harris said in a video with Mark Cuban that Trump’s tariff plan is “applying a machete when a scalpel is needed.”
Weiler said Harris is pushing “pretty standard Democratic policies” on economic policy.
Nearly 20 Nobel Prize-winning economists have sided with Harris over Trump, writing that her economic policies are “far better than Donald Trump’s counterproductive economic policies.” There is.
Mr. Weiler said Mr. Trump’s plan is more likely to curb U.S. economic activity than Ms. Harris’ plan.
