 Happy Friday and welcome back to On The Money. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line. See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N. Write us with tips, suggestions and news: slane@thehill.com, vneedham@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @VickofTheHill, @NJagoda and @NivElis. THE BIG DEAL--U.S. economy grows at 3.5 percent clip in third quarter: The U.S. economy grew at a 3.5 percent annual clip in the third quarter, slower than the spring but still a good sign of the nation's economic health. Growth was slower than the robust 4.2 percent in the April to June quarter but the economy continues to show strength in the final assessment before the midterm elections in less than two weeks, the Commerce Department reported on Friday. The two quarters are the best back-to-back showing since 2014. Consumers unexpectedly upped their spending to a 4 percent pace in the July to September quarter, the strongest posting since 2014. Consumer spending accounts for 70 percent of the economy. Jobs growth likely spurred more spending even as the labor market's expansion slowed in September to 134,000 jobs added. But the unemployment rate dropped to 3.7 percent, the lowest rate in 48 years as the job market tightens. The Hill's Vicki Needham breaks it down here. The downside: Business investment only expanded at a 0.8 percent pace -- the worst since late 2016 -- after posting a solid 8.7 percent gain in the second quarter and 11.5 percent in the first three months of the year. While consumer spending and inventories are important signs of short-term confidence, lagging investments raises alarms about how much more accelerated growth we can expect.
LEADING THE DAY
Dow drops 500 points as S&P enters correction: Stocks slid deeper into an October sell-off Friday morning as the Dow Jones Industrial Average shed more than 500 points and the S&P 500 index slipped into a formal correction. The Dow lost as many as 520 points Friday morning, a roughly 2 percent drop, before cutting its losses to close down 296. The S&P 500 fell 2.2 percent Friday morning, crossing the threshold for a correction by slipping more than 10 percent below its 52-week high. It ended the day down 1.73 percent. The tech-heavy Nasdaq composite fell more than 3 percent early Friday after Amazon and Google parent company Alphabet reported weaker-than-expected quarterly earnings. The index has fallen by 13 percent in October and crossed the correction threshold Wednesday. It closed Friday down 2 percent.
Friday's steep losses come as the market reels from a frantic end to a volatile year. The Dow and S&P erased their 2018 gains Wednesday, while the Nasdaq continues to drop amid a flight from potentially overvalued tech stocks. I break it down for you here. Brady appears to rule out lame-duck action on Trump tax cut: The chairman of the House tax-writing panel on Friday appeared to rule out taking action on President Trump's proposed middle-class tax cut until next year. Rep. Kevin Brady (R-Texas) said a 10-percent cut for middle-income Americans would be a priority for Republicans if they retain their majorities in Congress. "We expect to advance this in the new session of Congress if Republicans maintain control of the House and Senate," Brady, who leads the House Ways and Means Committee, said during an interview with CNBC. The comments are an acknowledgment that lawmakers have all but decided not to take action on the tax plan in the lame-duck session of Congress, despite Trump's wishes. When asked Monday about his tax plan, Trump told reporters that "we'll do the vote after the election." The Hill's Jordan Fabian fills us in here. CFPB to unveil payday rule revamp in January: The Consumer Financial Protection Bureau (CFPB) announced Friday that it would release a proposal to rewrite the agency's 2017 rule on short-term, high-interest loans in January 2019. The revamp will focus on the rule's provisions blocking lenders from issuing loans to borrowers deemed unable to pay them back. Acting CFPB Director Mick Mulvaney made the payday lending rule one of his first targets upon taking over the agency in December 2017.
GOOD TO KNOW
- A majority of Americans say they'd prefer rolling back the GOP tax cut to cutting spending to reduce the deficit, according to a new poll.
- Microsoft overtook Amazon to become the second most valuable tech company in the United States on Friday.
- The looming leadership change on the Senate Foreign Relations Committee could make it more difficult to press the administration on its Saudi Arabia policy and impose sanctions after the death of U.S.-based Saudi journalist Jamal Khashoggi.
- The FBI is reviewing Tesla's Model 3 production numbers as part of an ongoing criminal probe into whether the company misled investors, according to a Wall Street Journal report published Friday.
- Major car manufacturer General Motors is asking the Trump administration to back a national car program that would make automakers in all 50 states annually increase their output of electric vehicles.
RECAP THE WEEK WITH ON THE MONEY | 
