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GDP Grows at 3.9% Clip Despite Housing Crunch

GDP tops estimates on increased consumer spending

By Kevin Spak,  Newser Staff

Posted Oct 31, 2007 11:27 AM CDT
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(Newser) – The US economy grew at a brisk 3.9% pace in the third quarter despite the credit and housing turmoil buffeting Wall Street, according to Commerce Department figures released today. Overall construction spending was up—with record commercial and government spending offsetting the housing slide—while individuals increased spending 3% and employment held steady. “This is an extremely resilient economy,” one economist said.

The 3.9% GDP growth is the strongest showing in a year and a half, far exceeding analysts’ 3.1% prediction. The report comes as the Federal Reserve meets to discuss interest-rate cuts. Analysts still expect a quarter-point reduction intended to insulate the economy against long-term effects from housing woes. The dollar rose and treasury notes declined after the GDP report.

U.S. Federal Reserve Chairman Ben Bernanke waits for the start of the International Monetary and Financial Committee meeting at International Monetary Fund Headquarters in Washington, Saturday, Oct. 20, 2007. (AP Photo/J. Scott Applewhite)
U.S. Federal Reserve Chairman Ben Bernanke waits for the start of the International Monetary and Financial Committee meeting at International Monetary Fund Headquarters in Washington, Saturday, Oct....   (Associated Press)
In this file photo provided by the International Monetary Fund, Alan Greenspan, former Federal Reserve chairman speaks at the Per Jacobsson Foundation Lecture on Oct. 21, 2007, in Washington. Greenspan said Tuesday Oct. 23, 2007 that a bloated inventory of new homes has unsettled the U.S. economy but expressed...
In this file photo provided by the International Monetary Fund, Alan Greenspan, former Federal Reserve chairman speaks at the Per Jacobsson Foundation Lecture on Oct. 21, 2007, in Washington. Greenspan...   (Associated Press)
The U.S. Economy saw a 3.9 percent growth during the summer, despite the housing slump.
The U.S. Economy saw a 3.9 percent growth during the summer, despite the housing slump.   (Shutterstock.com)
This is an extremely resilient economy, said Ed Lazear, chairman of Bush's Council of Economic Advisers. It is really quite remarkable.
"This is an extremely resilient economy," said Ed Lazear, chairman of Bush's Council of Economic Advisers. "It is really quite remarkable."   (Shutterstock.com)
The 3.9% increase in gross domestic product exceeded forecasts for for the third quarter.
The 3.9% increase in gross domestic product exceeded forecasts for for the third quarter.   (Shutterstock.com)
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Ben Bernanke • economic growth • Federal Reserve • consumer spending • GDP • Fed funds rate

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