Investing.com -- The US economy grew at a slower than expected rate in the third quarter despite signs of waning inflationary pressures and solid wage gains.
In a release only days before the US holds a deeply contentious election that is likely to see Americans vote with their wallets in mind, preliminary data from the Commerce Department showed gross domestic product in the world's largest economy rose by 2.8% in the July-September period.
Economists had predicted the figure would match the second quarter's pace of 3.0%. The quarter-on-quarter slowdown was primarily a reflection of a dip in private inventory investment and a bigger decline in residential fixed investments, although these trends were partly offset by an acceleration in exports and consumer spending.
The GDP number comes amid a deluge of other economic indicators this week, including the so-called core personal consumption expenditures (PCE) price index -- an inflation gauge closely followed by the Federal Reserve that strips out volatile items like food and fuel. The measure came in at 2.2% in the third quarter, decelerating from a prior reading of 2.8% but faster than projections of 2.1%, while headline PCE cooled to 1.8%.
In a post on social media platform X, Kathy Jones, Chief Fixed Income Strategist at Charles Schwab (NYSE:SCHW) called the PCE returns "soft landing numbers," referring to a scenario in which a period of elevated interest rates quells inflation without sparking a meltdown in the broader economy or labor market.
Despite this relative resilience, an Associated Press-NORC Center for Public Affairs Research poll earlier this month found that a majority of registered voters describe the economy as poor, with issues like high food and housing costs exacerbating their concerns.
Voters, however, remained divided over whether Republican Party candidate Donald Trump or his Democratic rival Kamala Harris would be better stewards for the economy, the AP said. National polls remain very tight prior to the Nov. 5 ballot, with both Trump and Harris in a virtual tie in several battleground states that could impact the outcome of the election.
Separately on Wednesday, private payrolls for October unexpectedly jumped to 233,000, pointing to strength in the labor market despite a string of potential disruptions from devastating hurricanes and ongoing strikes. The all-important nonfarm payrolls report is due out later in the week.
Fed policymakers will likely be closely monitoring these data points as they assess whether to cut borrowing costs at their next meeting in November. The central bank slashed rates by an outsized 50 basis points in September, arguing that it was a necessary move to bolster the labor market.