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US Economy Before Midterms: Growth, Inflation, Jobs, AI Fears & Iran War Complicate Picture
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Firstpost•01-10-2026, 14:51
US Economy Before Midterms: Growth, Inflation, Jobs, AI Fears & Iran War Complicate Picture
- •US economic growth in Q2 2026 was stronger than estimated at 2.2%, driven by consumer spending, investment, and exports, with AI-related data-center construction contributing significantly.
- •Inflation remains above the Federal Reserve's 2% target, with CPI at 3.4% and PCE at 3.4% in August, exacerbated by rising energy prices due to the Iran conflict.
- •The Federal Reserve raised interest rates to 3.75-4% in September, balancing inflation control with the burden of high borrowing costs on households and businesses.
- •The labor market is cooling but stable, with 162,000 jobs added in August and unemployment at 4.1%, though consumer confidence is weak despite continued spending.
- •AI is driving investment but also raising concerns about job displacement, while the Iran conflict has introduced higher energy prices as a new economic risk.
Key Questions Answered
The US economy grew at an annual rate of 2.2 per cent in the second quarter of 2026, which was an upgrade from the earlier estimate of 1.5 per cent.
The Federal Reserve raised its benchmark interest rate by 25 basis points in September, bringing the target range to 3.75 to 4 per cent.
Inflation and the cost of living have emerged as the biggest economic concerns for voters as the November midterm elections approach.
