GDP Growth At Highest Level Since 2003
ROBERT SIEGEL, HOST:
There's some numbers that show the strength of the U.S. economy right now. The Commerce Department said today the GDP grew at a 5 percent annual rate last quarter. That's up more than a percent from what was previously estimated.
AUDIE CORNISH, HOST:
Another way to look at this - the U.S. economy grew at its fastest pace in more than a decade. This made for a very chipper day on Wall Street. For the first time, the Dow closed above 18,000.
SIEGEL: NPR's Yuki Noguchi reports the economy is expected to have a cheery New Year, as well.
YUKI NOGUCHI, BYLINE: GDP includes everything from government and consumer spending, to how much businesses spend to restock shelves. It accounts for imported and exported goods. Most of the recent economic data have been good. And for Gus Faucher, that signals party time.
GUS FAUCHER: You know, we get all this data, it's like Christmas to me, so...
NOGUCHI: Really? Is that what you asked Santa for this year?
FAUCHER: Yes (Laughter).
NOGUCHI: Faucher is senior economist at PNC Financial. He says the economy is finally firing on all cylinders. Other economic reports today indicate wages are up, consumers are spending more and business investment increased. And greater spending translates into more jobs and bigger corporate profits. But if you look at GDP over the course of the year, it's been inconsistent. In fact, if you were to chart it, it might look roughly like Santa's pointy hat. It started off in negative territory with a peak in the middle of the year and is expected to fall off from that high toward the end of the year. But Faucher says even with economies in Asia and Europe slowing down, things for the U.S. are looking good heading into next year.
FAUCHER: Even if gasoline prices weren't falling, the U.S. economy would still be in pretty good shape simply because we're seeing strong job growth, businesses are in good shape. So I think the fundamental underpinnings are pretty good. But the lower gasoline prices are providing a little bit extra boost.
NOGUCHI: But there are other factors offsetting some of that advantage. Doug Handler is chief U.S. economist for IHS Global Insight.
DOUG HANDLER: The fourth quarter is really not going to be quite as good as the booming quarters of the second and the third.
NOGUCHI: For one thing, he says, defense spending surged during the third quarter, and that spending will go away. Also...
HANDLER: Third quarter was a great quarter for exports. And given a lot of weakness that we're seeing in a lot of economies with a lot of our trading partners here, we don't see that sort of growth really carrying forward either.
NOGUCHI: Still, Handler says he expects growth will both be more consistent and higher on average next year. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.