The economy grew at annual rate of 3.5 percent in the third quarter, following an even more robust second-quarter rate of 4.2 percent, the best six-month performance in the past decade. There are more job openings, 7.1 million, than there are unemployed people, 6.1 million. The unemployment rate stands at a low 3.7 percent. Consumer confidence is at an 18-year high. The percentage of consumers expecting an improvement in their income prospects is up. No surprise, then, that consumption spending, almost 70 percent of GDP, rose in the third quarter at the fastest rate since 2014.
Why, then, did October see a plunge in share prices that vaporized $4.5 trillion of the world's wealth, about half of that loss incurred in the United States? Most consumers don't own shares, so their cheery job and income circumstances drive their confidence to high levels. Investors, on the other hand, look to the future from a present in which what were once modest jiggles in share prices have become deep dives and soaring ascents. Even though prices are settling about where they started at the beginning of the year—meaning traders are no worse off now than they were when the year began—they won't be found humming Johnny Mercer's tune, “When October goes. . . . I hate to see October go.” They hope for a better run between now and year-end.
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