The U.S. economy is humming. So why are Americans so grumpy about it?

Transcript

A MARTÍNEZ, HOST:

The U.S. economy is humming, so why are Americans so grumpy about it? New GDP figures out this morning show the economy grew more than twice as fast in July, August and September as in the previous quarter, but nearly half the people that Gallup surveyed this month rate the economy as poor. We're going to talk through the data and the doubters today with NPR's Scott Horsley. Scott, so let's start with that GDP reading that we got from the Commerce Department this morning. What does it tell us?

SCOTT HORSLEY, BYLINE: A, it tells us the economy is doing remarkably well. GDP grew at an annual pace of 4.9% in the most recent quarter. That's the best three months of growth we've seen since the end of 2021. And it's all the more impressive coming at a time when interest rates are the highest they've been in more than two decades. You know, earlier this year, a lot of people thought those high borrowing costs would tip the economy into recession. Instead, we've seen just the opposite. It seems to be revving up. Mark Zandi, who is chief economist at Moody's Analytics, says a big reason is the American people are still spending.

MARK ZANDI: The consumer is kind of the firewall between a recession or an economy that keeps on growing, and that firewall is hanging tough. The interesting thing is that consumers aren't out there spending with abandon. That's not what they're doing. They're just doing their part, which is, you know, exactly what we need, enough to keep the economy moving forward but not so much to fan inflation.

HORSLEY: Now, inflation is still elevated, but it's come down by more than half from its peak last summer. Unemployment remains very low, and now people's wages are growing faster than prices on average. So that's helping to sustain spending as well.

MARTÍNEZ: All right, so people are spending. What are they spending all that money on?

HORSLEY: Lots of things - travel, restaurant meals, cars, all those Taylor Swift and Beyonce tickets. GDP also got a boost from government spending in this most recent quarter and exports. Ed Gresser, who's a former assistant U.S. trade representative, says a lot of that export growth is tied to oil and natural gas.

ED GRESSER: The U.S. is becoming a very, very big exporter of energy. One of the big factors there is we are replacing Russia as the significant provider of natural gas to Europe and to some Asian countries. I think this is going to be a big part of U.S. export for a long time now.

HORSLEY: Gresser, who is now with the Progressive Policy Institute, notes that there's been a lot of investment here in the U.S. in terminals that allow the country to export more liquid natural gas. And just this month, we hit a milestone in the energy patch when domestic oil production reached an all-time high.

MARTÍNEZ: OK, so positive indicators - people are spending money. Why aren't they happy about it?

HORSLEY: Yeah. That Gallup measure of economic confidence this month was deep in the red. It's been negative almost every month since the pandemic began. And while it's not as bad as it was last summer when gasoline prices hit an all-time high, topping $5 a gallon, it's still pretty grim. Now, as usual, some of this is people viewing the economy through their partisan lenses. Republicans are gloomier about the economy than Democrats right now. But even Democrats are more likely than not to say the economy is moving in the wrong direction. Lydia Saad of Gallup thinks a lot of this is just a lingering hangover from high inflation.

LYDIA SAAD: Unlike GDP, that's very abstract, everybody feels the effects of inflation. Even though it's come down a lot, there's still a very clear memory of gas prices being 2 to $2.50 for about five or six years before the pandemic, and people just aren't getting used to $3.50 gas.

HORSLEY: Now, it's possible those gloomy attitudes will cause people to dial back their spending, which could mean slower economic growth in the months to come. And forecasters do expect growth to moderate in the final months of the year. So far, though, this economy has defied all the naysayers, and it's proven to be very resilient.

MARTÍNEZ: $3.50 for gas - I live in LA, Scott. I would love 3.50 a gallon. That would be awesome. NPR's Scott Horsley. Scott, thanks.

HORSLEY: Good to be with you.

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