GDP growth accelerates to 3.4% as voters face $4.22 gas prices

The U.S. economy expanded at an annualized rate of 3.4% during the three months ending in September, the fastest pace since early in the year. This figure represents a sharp acceleration from the 2.2% growth recorded in the first quarter and the 2.5% growth in the second quarter, according to data released by the U.S. Commerce Department on Thursday. The expansion marks a return to the growth levels seen throughout 2025, driven in part by a surge in spending on artificial intelligence.

Despite the strong output figures, the cost of living remains a dominant issue for households. The average price of a gallon of regular unleaded gasoline stood at $4.22 on Thursday, which is $1.19 higher than the price recorded a year ago. Diesel fuel costs have risen even more steeply, averaging $6.33 per gallon, a $2.65 increase from the same period last year. These price hikes are squeezing budgets as inflation runs at an annual rate of 3.7% for September, a figure that exceeds the Federal Reserve's 2% target by more than a percentage point.

Consumers are feeling the strain of prices outpacing wages. Wages began to trail inflation in April, reducing the purchasing power of take-home pay. The University of Michigan's monthly survey, released last week, indicates that consumer sentiment has fallen to the second-lowest level in the survey's 74-year history. In a separate poll conducted by ABC News, the Washington Post, and Ipsos, half or more of respondents described every household purchase category as unaffordable. Specifically, 71% of respondents called gasoline unaffordable, a dramatic jump from the 28% who felt that way in February before the war in Iran drove up fuel costs.

President Donald Trump addressed the economic situation at a rally in Corinth, Mississippi, on Monday. He described the U.S. economy as experiencing "unbelievable growth, the biggest growth in the history of our country." While acknowledging the rise in oil prices, he stated that the conflict with Iran was necessary to prevent the nation from acquiring a nuclear weapon. "I don't want to belittle it because it's a big thing but I thought the price of oil was going to go much, much higher and I was fully prepared to do it," he said.

The labor market continues to add jobs, though the pace has fluctuated. The Atlanta Federal Reserve analysis shows that employers added an average of 68,000 jobs per month over the first nine months of this year. This is a significant increase from the average of 10,000 jobs added monthly in 2025. However, recent monthly data reveals instability. The Bureau of Labor Statistics reported that employers added only 29,000 jobs in September. This number is a sharp decline from the 133,000 jobs added in August and follows a month in July where 10,000 jobs were lost.

The unemployment rate has remained low for nearly a decade. It has held at 4.4% or lower every year since 2017, with the exception of the pandemic years of 2020 and 2021. The federal government has released most major economic data ahead of the Nov. 3 midterm elections, providing voters with the official figures on growth, inflation, and employment before they cast their ballots.