👋🏾 HI, HEY, HELLO! Welcome back to Congress Nerd Daily. I hope today was everything for you. The midterms are in 5 days.
FIRST THINGS FIRST
The U.S. economy picked up speed over the summer, but fresh inflation data released this morning reminded many Americans why they still aren’t feeling particularly good about it.
Gross domestic product grew at a 3.4% annualized rate in the third quarter, up from 2.2% in the previous three months, according to the Bureau of Economic Analysis. The preliminary estimate showed stronger business investment, consumer spending and government spending, with particularly robust investment in computing equipment.
But the inflation numbers told a less encouraging story.
The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures price index, rose 3.6% in September from a year earlier. Core inflation, which excludes volatile food and energy prices, reached 3.1%.
Meanwhile, Americans’ inflation-adjusted disposable income fell 0.3% from August, and consumer spending was essentially flat after accounting for rising prices.
The reports landed five days before the midterms, giving both parties competing economic narratives to take into the final stretch.
Republicans can point to accelerating growth as evidence of economic resilience. Democrats can counter that a growing economy means little to families whose purchasing power keeps taking a hit.
The numbers also complicate the Federal Reserve’s next moves after policymakers held interest rates steady Wednesday. Stronger growth gives the central bank room to remain cautious, while persistent inflation makes the case for cutting rates harder.
The distinction may be simpler for voters: The economy is growing, but their money isn’t necessarily going further.
VIEW FROM THE HILL
A senior House Democratic leadership aide has a two-word response to the growing speculation that an influx of democratic socialists could spark an ideological showdown within the caucus next year.
“Completely overstated.”
The aide answered my question about whether the emerging narrative of a progressive-moderate power struggle was getting ahead of itself or posed a serious threat to the agenda Democrats have spent the past two years building.
Why the skepticism?
“Because it’s a figment of the media’s imagination,” the aide said.
When I asked who was more delusional about the prospect of a confrontation—reporters or the incoming socialists—the aide didn’t hesitate.
“Reporters.”
