The U.S. economy grew at an annualized rate of 3.4% in the third quarter, the Commerce Department’s Bureau of Economic Analysis said in its advance estimate on Thursday, slightly outpacing the 3.2% gain economists had expected in a Reuters poll.
At the same time, inflation accelerated in September, with the Commerce Department reporting a 3.7% rise that adds to concerns about price pressures. The release came less than a week before midterm elections that will determine control of Congress.
The stronger-than-expected GDP print stands in sharp contrast to recent measures of household sentiment. Consumer confidence and sentiment indicators have deteriorated markedly in recent weeks, underscoring a disconnect between headline economic growth and the public’s perception of the economy as voters head to the polls.
The mix of solid output growth and rising inflation could complicate decision-making for policymakers. While robust GDP may be seen as a positive for the incumbent administration, accelerating prices are likely to bolster calls for attention to inflation from both policymakers and political opponents in the run-up to the midterms.
Analysts cautioned that the BEA’s advance estimate will be revised in subsequent releases as more source data become available. For now, the data provide an early snapshot of third-quarter economic activity and frame the economic debate in the final days before the elections.