The Monday Moneybeat


MARY REICHARD, HOST: Today is Monday, October 1st. Thank you for turning to WORLD Radio to help start your day. Good morning. I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. Coming next on The World and Everything in It, the Monday Moneybeat.

Today marks the beginning of the fourth quarter, the final three months of the year. Meaning that private and government economists are preparing reports on how the economy performed in the third quarter that just ended.

Already we have a few indicators:

First, the markets. Stocks enjoyed their best quarter since 2013. The major stock indexes all posted big gains. The Standard & Poor’s 500 index of stocks added 7.2 percent in the third quarter, the tech-heavy NASDAQ, 7.1.

The Dow Jones Industrial Average hit the halfway mark this year actually down 2 percent. But made up for it and then some in the third quarter, adding 9 percent.

REICHARD: The government’s estimate of gross domestic product is the big report economists are eager to hear. That’s still to come for Quarter 3. But the government did last week issue its final revision for Quarter 2, and it was an even-better 4.2 percent annual growth rate. That’s 1/10th of a percent better than previously reported.

Most economists are expecting third quarter GDP to cool from that blistering pace: something more in the range of 3 to 3-1/2 percent. And if it holds there as expected, that’ll mean we likely finish 2018 with the best economic performance since 2005.

EICHER: We are now in the midst of a 10-year period of economic recovery from the financial crisis of 2008. But it is the weakest recovery since the Great Depression. Growth has been averaging just 2.2 percent a year.

The reason that matters is that economic recessions cost jobs and productivity. Recoveries recoup those losses, so speed is essential. In a typical recession-and-recovery cycle, it takes about two years to earn back all the jobs lost. But in this slow-growth recovery, it took more than six years.

This recovery required more than three years to recover gross domestic product losses. That’s unusual. A typical recovery recoups GDP losses in just over a year.

REICHARD: The biggest component of gross domestic product is consumer spending. It drives about 70 percent of GDP, so those Commerce Department monthly spending reports are closely watched indicators.

The government reported that in August, American consumers did spend more. It was up three-tenths of a percent. But that’s down from four-tenths the previous two months. What drove August down was a one-tenth of a percent drop in purchases of so-called durable goods. These are items meant to last about three years.

EICHER: But two other factors suggest better results to come: First, orders for durable goods rose 4.5 percent in August. That’s the biggest rise in six months. And second, incomes rose in August. Wages and salaries went up half-a-percent, the best since January.

One big area of concern, though, is the real-estate market. Pending home sales slipped in August for the fourth time in the last five months. Home prices are up and rising interest rates make borrowing more costly. A 30-year fixed-rate mortgage is now almost a full percentage point higher than it was a year ago.

And that’s today’s Monday Moneybeat.


(AP Photo/Richard Drew, File) In this May 17, 2018, file photo an American flag hangs above the bell podium on the floor of the New York Stock Exchange. 

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