STEVE INSKEEP, HOST:
In July through September, the U.S. economy grew faster than economists had predicted.
LEILA FADEL, BYLINE: That's according to a delayed report from the Commerce Department on GDP, the gross domestic product. The report is nearly two months late because of the government shutdown.
INSKEEP: But NPR's Alina Selyukh is here, regardless of when it comes out, to tell us what's going on. She's here in Studio 31. Good morning.
ALINA SELYUKH, BYLINE: Good morning.
INSKEEP: What stood out to you?
SELYUKH: So the U.S. economy is chugging along. That was the takeaway. It grew at an annual rate of 4.3%, which is some of the fastest growth we've seen in a couple of years. You know, the GDP report takes a bird's-eye view of the economy. It's got exports, imports, business investment. But this time, two factors really gave it a boost. One of them was the term of the year, which is AI - people and companies spending on computer hardware and other techy things.
INSKEEP: All of which gives me a sense of defying gravity because we've seen all of this anxiety about an overvalued stock market, about continued inflation, about tariffs, and even consumers feeling really bad about things.
SELYUKH: But the consumers are the perpetual motion machine, and they are driving this GDP report.
INSKEEP: In spite of a new consumer sentiment survey showing that confidence was down. So they're continuing to spend is what's happening here?
SELYUKH: Yes. You're referring to The Conference Board, which has a survey showing confidence down for the fifth month in a row. But, you know, I talked to Michael Zdinak. He's an economist with S&P Global Market Intelligence. And he has this line.
MICHAEL ZDINAK: Never bet against the American consumer. We're always willing to spend money we don't have on things we don't need.
INSKEEP: Ow (laughter).
SELYUKH: It's tough love. But historically, it's true. People will keep spending until things really turn. And right now, we're sort of in this suspended state. And for many people, things have started to turn, but not for everyone.
INSKEEP: Yeah, because there's this divide between - it's almost like two economies - people with higher incomes, people with lower incomes.
SELYUKH: Exactly. Increasingly, people who are doing most of the spending are wealthier folks. And here's what Zdinak said.
ZDINAK: The fact that real spending has outpaced real income so much means that people are drawing down on savings. And the people who can do that are the people who have those savings. You know, they're enjoying past wage gains or past wealth gains.
SELYUKH: Or, you know, buying things on credit.
INSKEEP: Yeah.
SELYUKH: Either way, what he's saying is our spending is growing faster than our incomes, which obviously cannot go on forever. So there are big questions about what happens to wages and jobs in the new year.
INSKEEP: OK, what are you watching in the new year when it comes to those?
SELYUKH: Well, you know, our spending is fully based on what we are now, what we think we'll earn in the future, right? So one thing - earnings currently - generally speaking, wages are still growing.
INSKEEP: But prices?
SELYUKH: So are prices. They're also growing. And even though inflation has cooled, wages and prices have sort of met in the middle, with new government data showing that personal disposable income after inflation and taxes was stagnant mid-year, not growing much. And then on future earnings, the latest jobs report from November saw a softening market, which has many people worried about getting a new job if they lose the one they have, and a soft labor market also chips away at workers' power to demand higher wages.
INSKEEP: Yeah, I suppose that's true. Unemployment is going up, although historically, it's still at a relatively low level.
SELYUKH: Yes.
INSKEEP: And it sounds like people are just getting out there and spending anyway.
SELYUKH: That is correct. People are spending more and more, but they are feeling increasingly uneasy about it.
INSKEEP: NPR's Alina Selyukh, thanks for coming by.
SELYUKH: Thank you.
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