US economy solid in final days of election campaign

One reason the economy often emerges at the top of voter concerns in polls is simply because it’s one of the few areas that large shares of both Democrats and Republicans agree is relatively important.

Meanwhile, much of the hard data has been solid or moving in the right direction.

Petrol prices are down, grocery prices are stabilising and wages, for at least the past year, have been rising faster than prices, which for many families is helping to offset the jump in living costs.

In September, the Federal Reserve cut interest rates for the first time in four years, saying it was increasingly confident that the inflation problem was easing.

A sharp rebound in jobs growth in September also quieted the worries of many economic forecasters, who have spent much of the last few years predicting a downturn that has not materialised.

On Tuesday, the Conference Board reported that its monthly index of consumer sentiment jumped in October, as confidence in job availability and optimism about future business prospects and income rose.

The share of people worried about an economic recession also fell to the lowest level since the organisation started asking the question in July 2022.

Samuel Tombs, chief US economist at Pantheon Macroeconomics, said he thought the improvement in sentiment was likely due to rising optimism among Republicans, as they grow more confident that Trump can win the election.

But Dana Peterson, chief economist for The Conference Board, said she thought it reflected growing realisation of the economic reality.

“The data are the data. What we’re seeing is that third quarter GDP was strong, the job market is healthy and inflation is slowing,” she said.

“After several years of volatility, consumers are saying we think inflation is not as intense, we’re not where we were… and we’re not as worried.”