Things are looking up in the U.S. economy — at least for the third quarter of this year.
The gross domestic product (GDP) — the measure of goods and services — rose at a 2.8 percent annual rate, much stronger than expected.
Economists expected third-quarter growth to be around a 2 percent annual rate, according to a Dow Jones survey.
JEREMY HOBSON, HOST:
From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.
And Wall Street is still watching Twitter after it went public today. The stock opened at $45.10 a share, which is almost three quarters more than its initial public offering price of $26 a share. Twitter CEO Dick Costolo told Bloomberg News the company's goal is to reach everyone on the planet.
DICK COSTOLO: With over 2.4 billion connected people in the world, we're less than 10 percent penetrated. So everyone inside the company has five or six examples of why they know the service could be so valuable to anyone, anyone in the world and why it should be valuable to anyone in the world.
HOBSON: Still a lot of questions though about how Twitter is going to start making some money. Meanwhile, we got a look at U.S. GDP today. The government reported that the economy grew at a rate of 2.8 percent in the third quarter, which was much stronger than expected. Derek Thompson is business editor at The Atlantic, and he joins us to discuss. Derek, welcome back.
DEREK THOMPSON: Hi there.
HOBSON: So 2.8 percent growth. Maybe it doesn't sound like a lot if you're in China where they're getting much higher numbers than that, but fastest the economy has grown this year.
THOMPSON: Right. 2.8 percent is a first estimate. It's better than we've been doing, but it's not - capital G - Good. And that's today's news. I think, though, we could benefit from looking at some context. For the last three years, the economy has really been a tug of war between, on the one hand, cars and houses and, on the other hand, government. Houses and cars are the big ticket private sector items. They drive recoveries. But for the first few years to recovery, you basically had nobody buying cars and houses. So we had to have government stimulus keep the economy alive.
But right now, it's the opposite. We have something like a housing recovery. Residential investment in this report grew by 14 percent annualized. But government has just been a disaster. And remember, this report doesn't even include the shutdown in October. So I do think those are the variables to look at.
HOBSON: So this is pre-shutdown. So what does that portend for the fourth quarter? And a lot of people are worried about what is going to happen with consumer spending as we get into the holidays season.
THOMPSON: Right. Economists expect the economy to slow down in the fourth quarter. This report was for July, August, September. The next will start with October, which, as we all know, is when the government shut down. The shutdown hurt, but it probably really hurt some specific businesses and cities like Washington, D.C., in particular, but not necessarily the economy at large in a visible way potentially. So it's not entirely clear the shutdown itself will have a tremendously visible effect on the next report.
HOBSON: Unless people think that this is a really rosy report. With 2.8 percent, there are a lot of economists saying wait a minute. Diane Swonk, the chief economist with Mesirow Financial, points out that imports and exports slowed down in the third quarter and so did consumer spending.
THOMPSON: Right. Yeah. Exports grew 4.5 percent. That's down from 8 percent. You know, exports aren't just a measure of how well our economy is performing. They're really also a measure of how well other economy is performing. You can have a perfectly strong economy, but if your trading partners aren't doing so hot, you have falling exports. And I think that's part of what explains the fall in those numbers.
The big picture here is that, you know, half the country is experiencing practically no real personal income growth. All the personal income growth we've seen over the last few years has happened towards the top. And so what we're really seeing is that the Wal-Mart crowd has had a remarkably hard time digging themselves out of the debt and the recession. And so the recovery has sort of trickled up. We need it to trickle down.
HOBSON: Well, and when you say Wal-Mart crowd, we should note that I think half of American adults go to Wal-Mart every single week. So that's quite a large portion of the country. Derek, we just have a couple seconds here, but you're great with words. Give me a word to describe the recovery that we're in right now.
THOMPSON: The word would be meh, M-E-H.
THOMPSON: It is a meh recovery.
HOBSON: Derek Thompson, business editor at The Atlantic, thanks as always.
THOMPSON: Thanks, Jeremy.
HOBSON: You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.