Prices rose 3.6% in September, new inflation data shows
The U.S. economy grew at an annual rate of 3.4% in the third quarter, the Commerce Department reported, with growth driven largely by massive investment in artificial intelligence and by consumer spending. A new inflation reading released the same day showed prices 3.6% higher in September, and the Americans NPR interviewed said the two numbers do not describe their lives.
NPR personal finance reporter Stephan Bisaha said gross domestic product, the department’s widest measure of the economy, grew faster in July, August and September than it did in the spring. “Just about any economist would be happy to see those numbers,” Bisaha told NPR host Scott Detrow.
Data from the Federal Reserve Bank of St. Louis put real gross domestic product at about $24.6 trillion in the third quarter. The headline strength runs up against the day’s other figure: prices rose 3.6% in September, and Bisaha said inflation remains high, with healthcare costs among the pressures.
The answers NPR collected included disbelief. “It’s scary,” said David Bolus, who is from the University of Alabama. “Stress,” said Kathryn Anthony, an OB-GYN and a fellow at a local university in Birmingham, Alabama. “I think it’s fixed,” said Jeannie Kimberly, a retiree in Spokane Valley, Washington.
Bisaha reached Kimberly on her flip phone as she cut coupons to save on groceries. She described the arrival of a coupon for a free bag of Oreos as a bright spot. “I got a coupon for a free bag of Oreos, any size. And I thought, boy, I never thought I’d be in this position where I would be so excited about a free bag of Oreos, any size,” Kimberly said.
Kimberly said she and her neighbors are all scraping to get by, and she does not buy the economic numbers. She described people in her community weighing whether to do without medicine or eat fewer meals: “OK, can I do without this medicine? Can I only have maybe two meals a day?”
The apparent contradiction — consumer spending is helping drive GDP growth even as households describe struggle — has two explanations, Bisaha said. Much of the spending growth comes from higher-income earners, and much of the rest reflects higher prices rather than more purchases. “Everything costs more, so the overall spending is higher, even as Americans are getting less bang for their buck,” he said, part of what happens when rising prices outpace wages.
Even people who would ordinarily be considered well off said they feel squeezed. Anthony said even doctors are trying to stretch their dollars these days, and that every day now requires a decision about money. “Every single day has to be a decision about how you’re spending your money. And so just have never had to actually live through that before,” she said.
Anthony said she is buying more in bulk, cooking more at home and choosing vegetables over meat. She is still spending — “I’m really good at spending money,” she said — but a cup of coffee has become a considered purchase. “Something that I never would have thought about getting, like a cup of coffee, is, like, now an intentional decision,” she said.
Bolus said he is cutting back on his number of expenses, but the items baked into his monthly budget keep getting more expensive. “I’m spending more on gas. I’m spending more on food. I’m spending more on incidentals,” he said, noting that he keeps a monthly book budget because he has stopped spending money on movies. Bisaha described it as a zero-sum game: when Bolus makes a cut, another cost rises.
The artificial-intelligence investment driving much of the growth is felt by construction workers building data centers, Bisaha said, but a lot of people outside construction and tech are not feeling that financial benefit. Many, he said, worry the power-hungry technology will push up utility bills and hurt their budgets.
“There just continues to be a disconnect between what the numbers are showing us and how people are feeling about them,” Bisaha said.