US economy grew less than expected as shock new figures are revealed days before election

The US economy undershot expectations in the third quarter of this year, weighing on inflation-weary voters less than a week before the presidential election.

Gross domestic product (GDP), which is a measure of all the goods and services produced in the three months between July and September, expanded at an annual rate of 2.8 percent.

That is down from a 3 percent pace in the second quarter, according to data released Wednesday by the Department of Commerce. 

Economists surveyed by Dow Jones had been expecting a 3.1 percent increase. 

Despite spending more, American consumers have been downbeat about their job and financial prospects, with Democratic Vice President Kamala Harris still trailing Republican Donald Trump in opinion polls about the economy.

'If you were to look at numbers like GDP growth or income or consumption, or even employment, 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.

While GDP growth missed expectations for the quarter, US growth this year is due to outpace other advanced economies like Germany, France and the United Kingdom, according to recent International Monetary Fund estimates.

Bret Kenwell, eToro US Investment Analyst, said that with the Federal Reserve in a rate-cutting cycle, each major economic report is now being scrutinized to determine when and by how much the Fed will lower interest rates. 

The central bank cut interest rates in September for the first time since 2020, bringing benchmark borrowing costs down from a multi-decade high.

He said that while the GDP report missed economists' expectations, the miss was minor and reaffirms that the US economy remains on solid footing.

'Solid but not blistering growth fits nicely within the current economic backdrop,' he said in a statement. 

'Too hot of a print and investors would likely question the Fed's decision to cut rates by 50 basis points in September, while a weak GDP print could reignite worries about a deteriorating economy.'

The Commerce Department said the GDP figure reflected 'increases in consumer spending, exports, and federal government spending.'

An October New York Times and Siena College poll of likely voters released last week showed that economic issues remained top-of-mind around two weeks before the election.

Those polled were slightly more inclined to trust Trump to do a better job handling the economy, with 52 percent of respondents preferring him to 45 percent support for Harris.