US GDP growth falls short of expectations

WASHINGTON — US economic growth undershot analyst expectations in the third quarter, according to government data released on Wednesday, weighing on voters before the presidential election.

GDP of the United States expanded at an annual rate of 2.8 percent in the July-September period, helped by consumption and government spending, slowing from the second quarter's 3 percent pace, the Department of Commerce said. Economists polled by Reuters had forecast the US economy advancing at a 3 percent pace.

The GDP estimate was published less than a week before Election Day on Nov 5, with Vice-President Kamala Harris, the Democratic Party candidate, up against former president Donald Trump.

Despite spending more, US consumers have been downbeat about their job and financial prospects, with Harris trailing Trump in opinion polls about the economy.

"If you were to look at numbers like GDP growth …, you'd say: 'Gosh, this economy is in pretty good shape'," said Dan North, senior economist for Allianz Trade North America.

"The one thing that completely destroys that narrative is the inflation that consumers have had to deal with," he told AFP.

North explained that as compared with January 2021, when price increases started ballooning, wages have cumulatively grown 18 percent. But households contended with larger overall upticks on expenses like food, shelter and gasoline.

This is likely the reason that voters felt the economy is doing poorly despite wage growth, alongside relatively low unemployment levels.

"It's been pretty hard to swallow," he said.

A recent poll jointly conducted by The Economist and YouGov showed that nearly 40 percent of US voters rank prices, inflation, jobs and the economy as the most critical issues in the election.

To gain more votes, both candidates have made sweeping promises to tackle inflation. However, many experts remained skeptical about their efficacy and sustainability, citing vague funding plans and the potential strain on a debt-reliant federal government.

Price woes

To address soaring prices, one of the major policies proposed by Harris is to impose a federal ban on "corporate price-gouging" on food and groceries. However, economists argued that the fundamental reason for soaring prices is limited supply rather than corporate price hikes.

A Bloomberg research indicated that US manufacturers have raised prices primarily to maintain profits in the face of rising costs and supply chain disruptions rather than inflating prices. Imposing restrictions on corporate pricing would disrupt the supply-demand balance and harm the economy.

Trump proposed expanding fossil fuel extraction to reduce energy costs to tame overall inflation. But experts cautioned that the plan may fall short of its promises.

Many of the largest shale drillers hesitate to ramp up production due to the uncertain global economic outlook.

Meanwhile, Trump and Harris took their nail-biting race to the western states on Thursday, seeking supremacy on border security and aiming to woo crucial Latino voters days ahead of the election.

Both campaigns have been sidetracked in recent days after controversies stemming from a remark by a warm-up speaker at a Trump rally, which initially blew back against Republicans before a damaging gaffe from President Joe Biden.

Harris made political hay from the comedian calling the US territory of Puerto Rico a "floating island of garbage", winning the backing of some Puerto Rican celebrities. But she then found herself on the defensive after Biden appeared to call Trump supporters "garbage" — prompting the Democratic candidate to state that she disagreed with criticism of people based on who they vote for.

Trump, who himself has branded Harris allies "garbage" at a public rally, was quick to pounce on the misstep with a publicity stunt as he climbed into a garbage truck at an airport in Wisconsin.

A Tuesday Reuters/Ipsos poll showed Harris leading Trump by 44 to 43 percent among registered voters nationally, well within the poll's margin of error.

Tensions are running high, with election workers in competitive states bracing for violence and Florida authorities arresting a man for menacing voters with a machete.

More than 59 million voters have already cast their ballot, according to the Election Lab at the University of Florida.

Agencies - Xinhua