MEGAN BASHAM, HOST: Today is Monday, July 30th. Thank you for turning to WORLD Radio to help start your day. Good morning. I’m Megan Basham.
NICK EICHER, HOST: And I’m Nick Eicher. Coming next on The World and Everything in It, the Monday Moneybeat.
TRUMP: We’re going to go a lot higher than these numbers, and these are great numbers.
EICHER: They are impressive. President Trump referring to second quarter Gross Domestic Product growth: a 4.1 percent annual pace.
It’s the best quarter of growth since the 2nd quarter of 2014, when the economy grew at a 5.1 percent rate.
From April to June this year, business investment grew, as did exports, and, as we reported last week, the big driver was consumer spending.
Now, it’s just one quarter. But if the trend continues, it’ll mean the economy will have broken out of a long cycle of tepid growth — around 2.2 percent for four years. The best annual growth in the Obama years was just 2.9 percent.
There’s evidence the current growth can continue. Americans have not only been spending; they’ve also been saving more than government economists thought.
And the administration negotiated a trade deal last week with the European Union — a positive sign after weeks of trade-war escalation with announcement after announcement of punitive tariffs on foreign-made goods.
Wall Street traders had anticipated last week’s Commerce Department report on economic growth — so the news did not drive the market.
BASHAM: What did drive the market was what investors saw as very bad news from two social-media companies, Facebook and Twitter.
Both companies lost 20 percent of their value virtually overnight — after they announced measures that should be to their long-term benefit, but do come at the cost of a smaller user base.
Facebook is the much bigger of the two and its loss amounted to $119 billion. Twitter’s plunge cost the company $6 billion in market value.
What’s driving all this is the two companies are cracking down on fake accounts and violations of terms of service.
It’ll drive their number of accounts down, and that’ll affect revenue, while at the same time increase operating costs to police bad behavior.
In the case of Facebook, the company plans to hire 20,000 content moderators this year. They’ll clean up posts, photos, and videos on its platform that violate the social network’s rules.
EICHER: Both companies touted themselves as growth companies.
And without growth, traders are left trying to figure out how to value them.
The dramatic fall last week for both Facebook and Twitter drove the tech-heavy NASDAQ stock index down. For the week, it lost 1.1 percent.
The smaller-company index, the Russell 2000, also fell. It lost 2 percent.
The Standard and Poor’s 500 index of stocks and the Dow Jones Industrial Average both enjoyed small gains on the week.
For the S&P 500, last week marked the fourth weekly gain in a row. On the year, all the indexes are in positive territory.
And that’s this week’s Monday Moneybeat.