New GDP Figures

And the economy grew 3.4 annualized rate in the 3rd quarter, even if it doesn't feel that way.

As Dean Baker notes, the overall picture is nowhere so rosy:

1) Investment growth is almost entirely an AI story;

2) Consumption growth is strong, but is driven by stock gains;

3) The trade deficit is soaring due to AI-related imports;

4) Housing construction continues to fall;

5) The Iran War is leading to double-digit growth in military spending;

6) State and local government spending is stagnating.

The AI boom is as close to a real-world example of Keynes' (snarky) thought experiment as I've ever seen.

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing. 

The numbers belie the lived experiences of most of us.

U.S. economic growth was robust over the summer, as businesses poured money into artificial intelligence and consumers kept spending despite high prices that have soured their mood ahead of midterm elections next week.

Gross domestic product, the broadest measure of goods and services produced in the country, increased at a 3.4 percent annual rate in the third quarter, adjusted for inflation, the Bureau of Economic Analysis said Thursday.

That was an acceleration from the 2.2 percent rate in the spring, and was the fastest growth in a year. Consumer spending, which accounts for more than two-thirds of economic output, grew at a 3.8 percent rate.

The strong spending and growth figures contrast with the poor marks that many voters are giving the economy as they head to the ballot box for next week’s midterm elections. Polls consistently show that Americans are frustrated with the high cost of living and hold President Trump and congressional Republicans responsible for failing to deliver on their promises to improve affordability.

Those frustrations are grounded in reality. Consumer prices were up 3.5 percent in the third quarter from a year earlier, driven in part by high gas prices that are the direct result of Mr. Trump’s decision to go to war with Iran. Americans are increasingly dipping into their savings to keep up with rising costs. Households, in the aggregate, saved just 4.1 percent of their after-tax income in the third quarter, the lowest rate in nearly four years. After-tax income, adjusted for inflation, rose in the third quarter as a whole but fell in September.