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The US economy probably grew a lot in the last quarter. Most people didn't notice.

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WASHINGTON — The U.S. economy is expected to grow solidly with a sharp recovery from the first half of the year, but most Americans are unlikely to notice anything about the rebound.

Persistent inflation continues to put heavy pressure on both economic growth and household budgets and has become a major flashpoint ahead of the midterm elections. A strong read on the next gross domestic product report, scheduled for release on Thursday, would be welcome news for Democrats, who are trying to convince voters they have plans to contain rising prices and put the economy on a more stable footing.

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While the latest numbers are likely to look like improvements on paper, economists say they don’t reflect major changes in the economy that could plunge into recession next year.

“This will look better than the two previous GDPR reports, but conditions on the ground haven’t changed much,” said Douglas Holtz-Eakin, chair of the American Action Forum and former director of the Congressional Budget Office. “Inflation still hurts. Concerns remain about Fed tightening. Things are not significantly different.”

GDP, the broadest measure of economic activity, is expected to increase roughly 2.9 percent between July and September, according to a tracker at the Federal Reserve Bank of Atlanta. This is in line with some of the stronger pre-pandemic years of economic growth.

Coming after a six-month contraction, the US economy shrank 1.6 percent in the first two quarters of the year, and then 0.6 percent. This first-half decline has fueled fears that the country is already in the throes of a recession, but recessions are not typical with unemployment near record levels. The official determination is made by a panel of experts, and economists generally agree that the US economy has survived a recession at least this year.

America’s return to growth contrasts sharply with other major economies, including Europe and the United Kingdom, which are either already in recession or are almost certainly heading towards one. China’s “zero covid” policy has also become a stumbling block to its economic growth after long being one of the leading engines. (China has lately delayed publishing its GDP data, hiding its economic situation.)

The latest US GDP figures are likely to be supported by a narrowing trade deficit, as the US imports fewer goods due to slowing demand. In addition, retailers’ inventory levels are expected to grow stronger as supply chain disruptions during the pandemic are rectified. None of these factors have much of an impact on the daily life of Americans.

One of the biggest problems in the November 8 midterm exams, where gun control, abortion rights and immigration came to the fore, is economic uncertainty. And the stakes are high: Democrats are close to six seats to lose control of both the House and Senate.

“Don’t be fooled by the recovery in GDP,” Joseph LaVorgna, chief economist at SMBC Nikko Securities America and former economic adviser to the Trump White House, told clients in a recent note. “Is the economy in danger? No. The economy is often making healthy gains in real GDP with the onset of the recession. Indeed, this has happened in four of the last six crises.”

A growing chorus of economists say a recession is almost inevitable in 2023 as the Federal Reserve continues to aggressively raise interest rates in hopes of slowing the economy enough to control inflation. There are also growing fears that turmoil abroad in Europe and Asia could seep into the US economy.

But for now, the economy remains strong with many measures. Unemployment at 3.5 percent is near its lowest ever, and many Americans are receiving pay rises. Business investment and consumer spending remain strong, even as households and business owners say they are pessimistic about their finances and the direction of the economy.

The White House cited strong job growth and stable consumer spending, which accounts for about 70 percent of GDP, as promising signs that the economy remains firm.

“If you’re trying to understand the strong growth in the US economy, obviously the job market makes a critical contribution,” said Jared Bernstein, member of the President’s Council of Economic Advisers. “Most people get their income from the job market – it’s about paychecks, not stock portfolios – so if people are working and making progress, that will be a significant contribution to the economy.”

Economists are closely watching an important measure that removes factors such as trade and retailers’ inventory levels. This metric, final sales to private local buyers, provides a clearer view of US demand and has increased in each quarter since the start of the pandemic. However, growth rates have started to decline this year, indicating that economic gains are slowing even as GDP rises.

“The nuance is really important right now,” said Andrew Patterson, senior international economist at Vanguard. “If you look at the underlying metrics, consumption by households, businesses and government consistently shows a downward trend. This time we can see positive GDP growth, but this is due to a decline in imports rather than higher consumption.”

However, reading economic tea leaves is often as much about household and business perceptions as it is about actual numbers. Despite a booming job market and bustling spending, many Americans feel incredibly pessimistic about the economy. Consumer sentiment remains at record lows as many Americans say they expect a rockier road ahead, according to a closely watched index from the University of Michigan.

This gloom is pushing voters across the country to reevaluate their decisions ahead of the midterm exams. Surveys consistently show that inflation remains a top issue for many Americans.

In Nashville, Cheryl Beaumont is voting Democrats for governor and Congress, but says some of her friends have switched to Republican candidates due to economic concerns. Many are struggling with higher food and gas costs and don’t think the current administration is doing enough to bring prices down, She said.

“Democrats still talk about gun safety and abortion, but the main concern for ordinary Americans is: How will I feed my family? How will I pay the rent?” said Beaumont, 52, who manages shipping logistics for a shoe retailer. “They want a plan. People can no longer afford to put principles ahead of inflation.”

Prices rose 8.2 percent last year, according to government figures, but many needs such as groceries, gas, utilities and healthcare have increased significantly. As a result, more Americans are breaking into bank accounts and taking on more credit card debt to make a living. Many say they feel a growing sense of hopelessness as wage increases and pandemic savings are wiped out by inflation.

Philip Hyatt, a barbecue catering business in Carson City, Nev., says recession concerns are pushing many customers to delay their reservations for next year. It’s also facing double-digit price hikes on just about everything from spices to spare ribs, and says it will vote Republican in the midterm elections, in part because it thinks President Biden isn’t doing enough to address rising costs.

“Most of this inflation was going to happen no matter who was in power,” he said. But I also see that there are things in the White House that are not conducive to getting us out of this situation or easing any of these pressures.”

But while voters still say the economy is their biggest concern this fall, there are signs that many Americans are starting to feel at least a little bit better about their finances as gas prices plunge from record highs this fall.

Theresa McCloskey, who owns a graphic design and printing firm near Philadelphia, has been battered by supply shortages and rising prices. But she says she’s more worried about abortion rights. Although She frequently votes for candidates on both sides of the aisle, this time she plans to stick with the Democrats completely.

“Although my job as a business person literally puts a roof over my head, I personally believe that my rights as a woman – the rights of my daughter and nieces – are far more important than anything the economy can give me,” the 62-year-old said. I’ve worked three jobs as a single mother before, and I’ll do it again if necessary to protect my rights.”

McCloskey, who stopped eating out and traveling to save money, says he’s optimistic about the economy. Schools, car dealerships and other customers continued to spend money on business cards, brochures and banners. Its sales are on track to surpass last year’s 20 percent, and he is hopeful the US can prevent a recession.

“Inflation is tough right now,” he said. “But if things get more expensive, I’ll either cut more or find another job. I won’t worry yet.”

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