Democrats have built much of their midterm campaign around the economy. They say the economy tanked under President Donald Trump, and inflation skyrocketed on his watch.
Neither claim survives contact with reality. Inflation skyrocketed under Joe Biden, and the economy is actually doing quite well. On Thursday, a new government report shattered the Democrats' doom-and-gloom narrative just days before voters head to the polls. The question is, though, will it matter?
The Bureau of Economic Analysis (BEA) reported that real GDP grew at a 3.4% annual rate in the third quarter of 2026. Economists expected 3% to 3.1%, so the economy beat forecasts and picked up speed from the 2.2% growth rate posted in the second quarter. According to the BEA, investment, consumer spending, and government spending drove the gains.
Look under the hood, and the picture gets better.
Consumer spending climbed 3.8%, which tells you Americans are still opening their wallets. Business investment outside of housing jumped 12.7%, powered by the boom in artificial intelligence. Spending on information processing equipment surged 37.4%, software rose 9.6%, and research and development grew 7.5%. Companies are betting big on the future. And that’s all good news.
To be fair, the report wasn't perfect. No report ever is. Housing investment dropped 3.3%, dragged down by high mortgage rates. The economy also had to absorb higher energy prices tied to the war with Iran, but it grew anyway, which says something about its underlying strength.
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Real final sales to private domestic purchasers, a measure that combines consumer spending and private fixed investment and strips out the noise from trade and inventories, rose 4.9%, up from 4.6% the previous quarter. And inflation cooled sharply. The gross domestic purchases price index fell to 3.0% from 5.6%. The PCE price index dropped to 2.1% from 5.0%, and core PCE, which leaves out volatile food and energy prices, slid to 2.5% from 3.3%.
The report lands as Trump, House Speaker Mike Johnson (R-La.), and Republicans across the country make their closing argument before the midterms. Democrats will almost certainly wave the numbers away, but Republicans now have one more piece of hard evidence to carry into the final stretch.
So again, I ask, will it matter?
Economic indicators tell us a lot, but they don't always capture how people actually feel. And here's the thing: prices are still high. Inflation has cooled under Trump, but cooling inflation only means prices are climbing more slowly. The damage done during the Biden years hasn't been undone. Families still feel it every time they buy groceries, fill up the tank, or pay the rent.
Democrats are counting on voters forgetting who caused that pain. They want people to look at today's prices and blame the guy in the White House now, while conveniently ignoring the guy who was there when those prices exploded. Sadly, the media is more than willing to help them pull it off, burying good economic news while amplifying every gripe about the cost of living.
The problem, however, is that Republicans can't simply wave a GDP report and expect voters to cheer. You can't just tell people to look at an economic report and feel good about the economy. That’s not how people assess their economic situations. Biden learned that the hard way when he spent months insisting prices were coming down while Americans watched them soar at the checkout line and at the pump. Voters didn't buy it then, and they won't buy a lecture now.
Republicans have the better record and the stronger economy. Their real challenge is reminding voters who lit the fire in the first place before Democrats and their allies in the press convince them it was the guy holding the hose.
