Robust consumer expenditure has enabled the US economy to sustain a healthy growth trajectory, reflecting its resilience just ahead of the presidential election.

In the third quarter, the gross domestic product (GDP) expanded by 2.8 percent year-on-year, marking a slight decrease from the 3 percent growth observed in the preceding quarter.

President Biden highlighted these results, stating, “We have made significant progress since my administration began—emerging from the most severe economic downturn since the Great Depression to now leading the global economy.”

He added, “Critics predicted we would need a recession to curb inflation; however, we have maintained an approximate 3 percent annual growth while inflation rates have reverted to pre-pandemic levels.”

The economy is anticipated to be a pivotal topic for voters in the upcoming American election on November 5, especially as consumers contend with rising food and housing expenses. Meanwhile, forecasts predicting a recession have not materialized, and the US economy has outshined many international counterparts. Voter surveys consistently favor Donald Trump over Kamala Harris regarding economic management.

Factors such as increased wages, low unemployment rates, and declining inflation are boosting consumer confidence and spending. Between July and September, consumer spending surged at an annualized rate of 3.7 percent, up from 2.8 percent during the second quarter.

This information follows the Federal Reserve’s recent decision to lower interest rates last month for the first time in four years, reducing the borrowing cost by 0.5 percentage points to a range between 4.75 and 5 percent. Financial markets are speculating that the Fed will consider another quarter-point reduction when members convene for an interest rate meeting on November 7.

Data from the Department of Commerce revealed that consumers have been relying on savings and credit to fuel their purchases, with the personal savings rate in the third quarter decreasing to 4.8 percent from 5.2 percent.

The personal consumption expenditures price index, closely monitored by the Fed as a key inflation measure, excluding the often-volatile food and energy categories, increased by 2.2 percent in the third quarter, significantly down from the 2.8 percent rate in the previous quarter. A report from the Conference Board on Tuesday indicated that its consumer confidence index reached a nine-month high in October, bolstered by improved perceptions regarding the job market.

The percentage of consumers anticipating a recession within the next year fell to its lowest level since the question was first posed by the board in July 2022.

Investment in business equipment surged by 11.1 percent, the largest increase since the second quarter of 2023, alongside a rise in government spending. However, the rate of inventory accumulation decelerated, and the trade deficit widened, both factors acting as constraints on GDP growth.

Residential investment, which encompasses home construction and sales, has experienced a decline for the second consecutive quarter.

Ryan Sweet, chief economist at Oxford Economics, noted that the GDP figures convey a simple yet powerful message: the economy is performing well and inflation is easing, which is encouraging news for the Federal Reserve.