United States economy is expected to report another quarter of solid growth on Wednesday, less than a week before the presidential election, but analysts say it remains unclear whether positive data can sway inflation-weary voters.

Even as they spend more, U.S. consumers are pessimistic about their jobs and financial prospects, meaning Democrat Kamala Harris still ranks behind Republican Donald Trump in opinion polls on the economy.

“If you were to look at numbers like GDP growth, income, consumption, or even employment, you would say, ‘My God, this economy is doing pretty well,'” said Dan North, senior economist at Allianz Trade North America.

“The only thing that completely destroys this discourse is the inflation that consumers have had to face,” he told AFP.

The world’s largest economy is expected to grow 3.0% annually in the third quarter, according to a market consensus published by Briefing.com.

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This is the same rhythm as the April-June period — and WE This year, growth is expected to outpace that of other advanced economies like Germany, France and the United Kingdom, according to recent estimates from the International Monetary Fund.

Economists say the engine of growth is once again strong consumption, with business investment providing additional support.

But Americans remain pessimistic about their financial results.

An October New York Times/Siena College poll of likely voters, released last week, showed that economic issues remained a priority about two weeks before the election.

Respondents were slightly more likely to trust Trump to better manage the economy, with 52% of respondents favoring him to 45% favoring Harris.

Inflation is ‘hard to swallow’

North explains that compared to January 2021, when price increases began to skyrocket, wages have increased by 18% in total.

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But households faced larger overall increases in expenses such as food, housing and gasoline – with cost increases ranging from 22 to 29 percent.

This is likely why voters believe the economy is doing poorly despite job and wage growth, as well as relatively low unemployment levels.

“Does the man on the street care if GDP is 2.8 or 3.1? No, they want to know how inflation affects them,” North said. “That’s been pretty tough to swallow over the last few years.”

Workers may have experienced 17 months of positive real wage growth, but they experienced 25 months of negative growth before that, noted Julia Pollak, ZipRecruiter’s chief economist.

As workers are accustomed to positive wage growth before corona virus pandemic, many still feel like their salaries need to catch up, she added.

Excessive dependence on credit

Consumers are also turning to credit cards and dipping into their savings to finance their spending, putting particular pressure on lower-income and younger households. people.

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Economists point to an increase in credit card delinquencies in recent years.

Credit card delinquency rates hit a nearly 12-year high in the first quarter of this year, according to a report released in July by the Federal Reserve Bank of Philadelphia.

The main support for GDP growth on Wednesday will come from consumer spending, with business investment expected to “provide another positive boost”, said Michael Pearce, deputy chief U.S. economist at Oxford Economics.

“Election uncertainty could weigh on business investment in the fourth quarter, but the effects are normally not that significant,” Pearce told AFP.

He added that the GDP growth figure is unlikely to influence the Federal Reserve’s decision on interest rates next week.

Source: AFP