RENEE MONTAGNE, Host:
Our business news starts with a surprise from the economy.
(SOUNDBITE OF MUSIC)
MONTAGNE: Here's NPR's Jack Speer to tell us about it.
JACK SPEER: Perhaps you remember the dire predictions from the analysts. The falloff in housing threatened to drag down the entire economy. High-energy prices would put the kibosh on consumer spending, and runaway inflation was poised to take off. David Wyss is an economist at Standard & Poor's. He says in the end, that none of those things happened in the final three months of last year.
DAVID WYSS: First of all, the consumer was out there really spending his heart out at Christmas. It's a very good Christmas for the retailers. Consumer spending in real terms was up 4.4 percent for the quarter. And that's an extremely strong performance. We also saw a continued solid capital spending - equipment spending was up 2.8 percent. And most importantly, the trade deficit - which has been a drag on the economy for a long time - improved.
SPEER: As for the predictions about the effect of housing on the economy, Wyss says while that sector did take a hit, on its own, it wasn't big enough to drag down the entire economy.
WYSS: Housing did above what we thought. It was down 19 percent. That's a huge drop. Remember, it's only 6 percent of the economy. And it was offset to some extent by the fact that we still had a pretty good strength in non-residential investment.
SPEER: Jack Speer, NPR News, Washington.
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