US GDP figures expected to show growing economy as recession fears mount

© Seth Wenig The US economy is expected to have rebounded after two months of contraction as billionaires and banks predict the nation is heading towards a recession. AP

The US economy is expected to have grown after two months of contraction, as bankers and billionaires raise speculation over a recession next year.

Thursday’s report on the nation’s gross domestic product (GDP), due at 8.30am ET, comes as US consumers continue to tackle the higher cost of living, an issue that is expected to be a prominent concern for voters in next month’s midterm elections.

US GDP, the most comprehensive indicator of economic activity, is expected to have grown by 3.1 per cent between July and September, a data tracker from the Federal Reserve Bank in Atlanta, Georgia, shows.

The third-quarter advanced estimate follows six months of economic downturn in the US.

Previous data released by the Bureau of Economic Analysis showed that the US economy shrank by 1.6 per cent in the first quarter of 2022, followed by an additional decline of 0.6 per cent in the following quarter.

The two consecutive quarters of economic contraction brought the US into what is known as a “technical recession”.

Claims of a recession, though, have been rebuffed by the White House and Federal Reserve, which pointed to other indicators.

The nation’s 3.5 per cent unemployment is near a historic low and consumer spending remains resilient.

This puts Washington at odds with billionaires Elon Musk and Jeff Bezos, JP Morgan and former Treasury secretary Steve Mnuchin who all have practically guaranteed a recession in 2023.

Chief among their concerns is Federal Reserve Chairman Jerome Powell’s handling of the inflation crisis gripping the US.

With costs of goods 8.2 per cent higher than they were a year ago and the war in Ukraine damaging supply, the central bank has raised its benchmark short-term interest rates to increase borrowing costs and slow down the economy.

A strong GDP report would be welcome news for Democrats, who are facing the prospect of losing control of Congress in midterm elections in two weeks.

Many voters will head to the polls on November 8 thinking about the economy.

With inflation still near a 40-year high, 44 per cent of likely voters said economic concerns are the most urgent facing the US, a New York Times/Sienna poll found.

Voters whose primary concern is the economy favour Republicans by a two-to-one margin.

Mr Biden has recently been promoting his administration’s efforts to reduce costs for families in a last-ditch attempt to woo voters.

They include tapping into the Strategic Petroleum Reserve to lower petrol costs and cracking down on so-called junk fees charged by banks.

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