White House Economic Director Sees Strong US GDP Growth as Rising Inflation Keeps Fed Watchful
White House National Economic Council Director Kevin Hassett described the U.S. economy as being in a boom driven by strong consumer demand. Hassett noted that elevated spending, particularly on travel, resorts, and airfares, aligns with gross domestic product growth approaching 4%. However, he cautioned that increased consumer spending is a development the Federal Reserve needs to monitor closely following recent price surges.
The economic expansion comes alongside emerging inflation pressures. Bureau of Labor Statistics data for September showed annual inflation rising to 3.7% from 3.4% in August, while core inflation reached 2.6%. Although Hassett pointed to inflation-adjusted wage gains since the current administration took office, official statistics indicated real average hourly earnings dropped 0.5% in September and 0.7% year over year. Meanwhile, job creation slowed to 29,000 additions for the month with unemployment at 4.2%.
Investors are keeping a close eye on the Federal Reserve's upcoming policy meeting on October 27-28. Bank of America maintained its call for an October interest rate hike, estimating that markets currently price in a 20% probability of a rate increase. Additionally, government officials are actively monitoring debt levels and financial instruments related to artificial intelligence firm CoreWeave, though Hassett stated there is no immediate cause for panic.
Key points
- White House Economic Director Kevin Hassett estimated U.S. GDP growth is near 4%, driven by consumer demand in travel and resorts.
- September Consumer Price Index data showed annual inflation rising to 3.7%, while core inflation increased to 2.6%.
- Real average hourly earnings fell 0.5% in September and 0.7% year over year, with 29,000 jobs added and a 4.2% unemployment rate.
- Bank of America maintained its expectation for a Federal Reserve interest rate hike at the October 27-28 meeting.
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What did Kevin Hassett say about U.S. GDP growth and the economy?
Kevin Hassett stated the U.S. economy is in a boom with gross domestic product growth near 4%, propelled by strong consumer spending in sectors such as travel, resorts, and airfares.
What was the U.S. inflation rate in September?
Annual inflation rose to 3.7% in September from 3.4% in August, while core inflation accelerated to 2.6% from 2.4%, according to Bureau of Labor Statistics data.
Is the Federal Reserve expected to raise interest rates in October?
Bank of America expects an October interest rate increase, noting that market pricing reflects a 20% probability of a hike at the Federal Reserve policy meeting on October 27-28.