For those hoping to see improvement in the U.S. economy, last week’s jobs report offered a new round of discouraging news: The unemployment rate reached a four-year high, and job growth has slowed to levels unseen since the Great Recession.
This week, however, the news was far more heartening, although the data came with some fine print. The New York Times reported:
The U.S. economy grew at a vigorous pace through the end of September, despite the uncertainty created by tariffs and widespread concerns about affordability among households.
Economic growth rose at a 4.3 percent annual rate in the third quarter, the Commerce Department reported Tuesday, an acceleration from the previous quarter.
By any fair measure, 4.3% quarterly GDP growth is a very encouraging figure, which exceeded expectations and should quiet predictions of a recession, at least for now. What’s more, this was the strongest quarterly growth since the summer of 2023, when the nation saw 4.7% quarterly GDP growth (and when Donald Trump told the public that the economy was terrible).
While the president was understandably quick to celebrate the latest data, there are some additional elements to the news that ought to keep the enthusiastic response in check.
For one thing, the strong growth in the third quarter (spanning July through September) clearly did not translate into job growth.
For another, The Associated Press reported that the latest update from The Conference Board showed that consumer confidence fell in December to its lowest level since the White House’s tariffs were rolled out in April.
Just as notable are some of the details in the GDP report itself. The Times’ report added, for example, “Disposable personal income, after taxes and adjusted for inflation, was flat, a sign of nagging inflation still eating into purchasing power. … Lower-income families are wrestling with slowing wage growth and rising costs of various household goods, like beef, coffee and furniture.” This dynamic is fueling concerns about what’s known as a “K-shaped” economy, in which those at the top fare well and keep spending, while those with less struggle more. In his latest Substack essay, economist Paul Krugman explained, “Trump may be largely, though indirectly, responsible for the K-shaped economy. His tariff and other policies have created uncertainty that has paralyzed hiring. The fact that workers are finding jobs hard to get, in turn, has hurt the employment and wages of disadvantaged groups, including ethnic minorities and low-wage workers in general.” It’s something to keep in mind as the president tries to pat himself on the back.
Steve Benen is a producer for "The Rachel Maddow Show," the editor of MaddowBlog and an MS NOW political contributor. He's also the bestselling author of "Ministry of Truth: Democracy, Reality, and the Republicans' War on the Recent Past."
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