Economy Demonstrates Vigor Despite Credit Woes

The nation's gross domestic product — the broadest measure of economic activity — grew at an annual rate of 3.9 percent during the summer. The indicator's strength signals economic resilience in spite of ailing housing and credit markets.

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STEVE INSKEEP, host:

NPR's Business News starts with economic growth picking up.

So there's trouble in the housing market and the credit market. New numbers out this morning show the economy may be shrugging them off. The nation's gross domestic product rose during the three months ending in September, growing at an annual rate of 3.9 percent. GDP growth is the broadest measure of the nation's economic activity.

NPR's Jim Zarroli is covering this story. And Jim, what happened here?

JIM ZARROLI: Well, that is what a lot of people are asking right now. This is simply much higher than expected. I think economists had forecast that the GDP number for the third quarter would be about three percent, maybe 3.1, and this is just higher than that. A lot of people had thought that the housing troubles were going to drag the economy down. That has happened to a degree.

We see that construction spending fell by 20 percent, for instance, which is a sizable number - but that was offset by the fact that consumer spending was higher than expected. Consumer spending grew by three percent.

So we haven't seen the kind of impact on the job market; that's still 4.7 percent in employment rate...

INSKEEP: So...

ZARROLI: And there was a marked increase in exports, up...

INSKEEP: Just in a couple of seconds, Jim. If you're the Federal Reserve, meeting today, deciding perhaps whether to cut interest rates, how does information like this affect you?

ZARROLI: Well, it has to raise questions about that. There was a pretty strong consensus that the Fed was going to cut rates again. I think it probably still will, but this has to give Fed members a pause.

INSKEEP: Okay, NPR's Jim Zarroli in New York. Thanks very much.

ZARROLI: You're welcome.

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