ALEX CHADWICK, host:
From NPR News, It's DAY TO DAY.
U.S. stock markets continue their slide today. Yesterday's 2.3 percent decline led to similar trends overnight in Europe and Asia. In Tokyo, the Nikkei dropped even more than 2.3 percent. Joining us is MARKETPLACE's John Dimsdale.
John, yesterday's drop was blamed on the weak housing market. Is that the same story today?
JOHN DIMSDALE: Yeah, it is. The markets have been nervous since last winter about mortgage default rates and the collapse of a price bubble. You know, as home prices were rising, consumers had the confidence to keep spending. And now the worry is that consumers are going to close their wallets if they are concerned about their home equity leveling off. The economy seems to be in a bit of a transition here, from consumer-driven growth to more export driven. Strong economies overseas - in Asia and Europe, especially - are creating demand for U.S. products. The weak dollar, of course, helps because it makes U.S. goods and services more affordable overseas.
CHADWICK: What about the good news today? And it really is good news. The Commerce Department reporting on economic growth for the second quarter. And it sounds like the economy is really doing pretty well.
DIMSDALE: Yeah. Growth jumped to 3.4 percent in the second quarter, and compare that to 0.06 percent growth in the quarter before that. There was good job growth, wage increases. In fact, President Bush did a bit of crowing after a meeting with his economic advisers at the White House this morning.
President GEORGE W. BUSH: One of the interesting aspect of this economic growth is that we have benefited from increased exports; in other words, U.S. farmers and small business owners and manufacturers have found markets overseas for our products.
CHADWICK: Well, John, if the economy is performing so well, why did the stock market tumble more than 200 points not once but twice this week?
DIMSDALE: Well, Wall Street appears to be more focused on the impact of mortgage defaults and credit risks, especially for these companies and hedge funds that had been doing deals, recently using a lot of debt. Many economists, such as University of Maryland business professor Peter Morici, are saying that the stock market is missing the good news and overreacting to the housing slump.
Professor PETER MORICI (University of Maryland): The price of an existing home has been up every month since January. It is now higher than it was a year ago. While the pace of sales is slower, you can still sell your home if you want. People are feeling wealthier. Housing construction won't continue to drag the economy down as it has in the past. So overall, I think, we can look forward to moderate growth.
DIMSDALE: So if the professor is correct, the stock market is only going through a temporary correction, perhaps reflecting this transition that the economy is going through. Remember, there were similar drops back in January and February. And so far the Dow is still up eight percent for the year.
CHADWICK: Thank you, John - John Dimsdale of Public Radio's daily business show, MARKETPLACE. It's produced by American Public Media.