Democrats and Republicans rush to patch up holes in US economy

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According to a recent Pew Research Center survey, the economy is the most important issue for voters in the midterm elections; 79% of registered voters said that the economy is very important to their voting decisions - this statistic took the highest number out of the 18 items on the survey.

Before the midterm elections, there are 6 statistics we could look at to gain further understanding of the US economy. 

1. 8.2% Inflation in September

Much of the Democrats' and Republicans' focus was on inflation in recent months. From the previous year, prices of goods have increased by 8.2%. Gas and used car prices have fallen in recent months, in addition to food prices, rents, and medical care. 

However, the most influential factor is the interest rate hike by the Federal Reserve, which has hiked up interest rates by 0.75 percentage points. 

2. The price of gas is at $3.8 per gallon as of November 6

Gas prices in recent weeks have eased from reaching over $5 a gallon in mid-June. Due to the war in Ukraine, oil prices were on a rise. Since the prices reached their high in the last few months, several factors have been contributing to the lowering of the prices. 

3. Unemployment rate is 3.7% as of October 

The labor market remains strong according to economic data, though the unemployment rate is 3.7%, which is a slight increase from September. 

4. Jobs: 10.7 million in September

In terms of jobs, job opportunities have declined from March but remained high at 10.7 million in September. The US economy added 261,000 jobs in October.

5. GDP: 2.6% in the third quarter of 2022

The economy, after falling for 2 quarters back-to-back, rose again in the third quarter as the GDP grew 2.6%. The increase was driven by trade as US companies exported more goods and services.

Spending slowed down from the previous quarter, however, and residential investment decreased 26.4% year-on-year.

6. New home sales: 603,000 units at an annual rate

The housing sector in the US suffered the heaviest impact of the Fed's interest rate hike - as a result, home sales fell. 

By the end of October, the 30-year fixed-rate mortgage exceeded 7% for the first time since 2002.

Recession is certain

Last month, Bloomberg forecasted that in the next 12 months a recession in the United States is effectively certain. Bloomberg economists Anna Wong and Eliza Winger forecasted in their latest recession probability models that there is an increased probability of recession over all timeframes, during which it will hit a downturn reaching 100% in October 2023 compared to 65% within a comparable period during the 12-month estimate.

These projections come just before the midterms in November and shortly after US President Joe Biden announced, while in an ice cream shop, that the US "economy is strong as hell" which placed him in hot waters as his comment comes as the country faces one of the worst economic crises since 2008.

The Wall Street Journal's latest survey of economists concluded that the US economy will tip into a recession next year, as the Federal Reserve struggles to bring down firmly high inflation. The probability of a recession in the next 12 months is now 63%, up from 49% in July's survey, according to the report. It is the first time the survey has put the probability above 50% since July 2020, following the previous short but sharp recession.

Projections for 2023 are becoming increasingly pessimistic. Economists now expect the GDP to contract in the first two quarters of the year, a downgrade from the previous quarterly survey, which predicted mild growth. Economists now predict that the GDP will contract at an annual rate of 0.2% in the first quarter of 2023 and shrink by 0.1% in the second quarter.