The Federal Reserve played a significant role in supporting this growth by cutting the federal funds rate by 0.50% on September 18. This decision marked the first rate change since July 2023 and the first cut since March 2020. Prior to the cut, the Fed’s target range was between 5.25% and 5.50%, the highest since 2001. The rate cut was partly in response to inflation, which dropped to 2.5% in August and continued to decrease in September, sparking concerns about an overheating economy.
- Federal Reserve Action: The Fed cut the federal funds rate by 0.50% in September, marking the first cut since March 2020, in response to inflation concerns and economic cooling.
- Labor Market Resilience: Unemployment dropped to 4.1% in September with 254,000 jobs added, signaling a strengthening job market after months of stagnation.
- Inflation Trends: Inflation, which peaked at 9% in June 2022 under the Biden administration, has dropped to 2.5% as of August, a significant improvement but still a focal point for voters.
- Economic Outlook: The BEA’s upcoming report and external factors like the 2024 election will shape the trajectory of the U.S. economy, which remains a top concern for over half of voters.
The labor market also showed signs of strength, with unemployment falling to 4.1% in September and the addition of 254,000 nonfarm payroll jobs. This follows a similar trend in August, where unemployment decreased to 4.2%. The unemployment rate had not declined since March, indicating a positive shift in the job market.
Inflation has been a critical issue under the Biden administration, peaking at 9% in June 2022. This was a significant increase from the 1.4% rate when President Biden took office in January 2021. The economy remains a crucial topic for voters, with 52% stating that candidates’ positions on the economy are “extremely important,” according to a Gallup poll from October 9.
The BEA will release a second estimate for the third quarter on November 27, which could provide further insights into the U.S. economic trajectory. The current growth figures are promising, but the upcoming presidential election and global economic conditions could influence future performance.