LEILA FADEL, HOST:
The last major readings on the economy ahead of the midterms are in, and overall, it shows the economy is doing quite well. But Americans are still feeling gloomy about their personal economies as they head to the polls, and new inflation data also out today helps explain why. Here to tell us about all that is NPR's Stephan Bisaha. Good morning, Stephan.
STEPHAN BISAHA, BYLINE: Good morning.
FADEL: So first we got the latest GDP numbers, and I take it they looked pretty strong.
BISAHA: Yeah. Growth was on the higher end of what analysts predicted. We're talking about the broadest measure of the economy here from the Commerce Department, gross domestic product. This one covers July, August and September. And over that time, GDP grew at an annual rate of 3.4%. Basically, seeing a three at the front of GDP is a strong sign of growth. And that's also a sharp increase from the spring, which was already pretty solid.
FADEL: What's behind that strength?
BISAHA: Two things. First there is the continued massive investment from the tech industry into artificial intelligence. We're talking companies like Meta building all these massive data centers. That does boost the economy. Think of all the construction and jobs needed to build some of these places.
Second is that shoppers keep shopping. Consumer spending is the biggest portion of GDP. But this economic growth does feel delicate. That's according to Mark Zandi, chief economist at Moody's Analytics.
MARK ZANDI: We're growing. The economy's moving forward. But it's a very, very fragile growth. It doesn't feel like we're kicking in on all cylinders.
BISAHA: He blames that fragility on inflation and ties it to the Trump administration's policies on things like tariffs and the U.S. war against Iran, which has driven up energy prices.
FADEL: We're also learning more about that inflation today. What do we know about how much prices are up?
BISAHA: Inflation is still higher than the Federal Reserve wants. Today we did get a new reading on inflation from the Commerce Department. And it showed prices rose 3.6% in September from a year ago. That mostly matches an earlier inflation report we got a few weeks back from September for the - from the Labor Department. And it's not just that prices are going up. It's that prices are going up faster than people's wages, people like Siri Steven. She's a resale store manager in Decorah, Iowa. She says higher prices mean her family can't put away money for emergencies.
SIRI STEVEN: It's more noticeable now with, like, the price of gas going up and the price of food going up. And bills like our utilities go up. Like, everything is increasing, and wages just aren't really increasing with that.
FADEL: So consumers aren't happy about inflation, neither is the Fed. And yet the central bank decided to hold interest rates steady yesterday. What's going on?
BISAHA: So the Fed did already raise interest rates once in September. And that was their way of applying the brakes to the economy to slow down inflation. But the Fed knows even a small rate hike can be painful for consumers. It often leads to rising mortgage interest rates and rising credit card rates.
Both are already high. So the central bank wants to be cautious. It wants to make sure it's tapping those brakes rather than slamming them. And then there's the midterms right around the corner. The Fed denies that elections play any role in their decisions, but economists do believe they're reluctant to cause any waves right before Americans head to the polls.
FADEL: That's NPR's Stephan Bisaha. Thank you, Stephan.
BISAHA: Thank you. Transcript provided by NPR, Copyright NPR.
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