The U.S. Economy Has Its Best Quarter in a Year

Alphabet shares fell almost 13% on their worst day ever, erasing about $500 billion in market value. Investors are worried that Google’s search business is slowing as artificial intelligence changes how people look for information online. The central challenge is how Google can rebuild its cash-generating search business around AI without undermining the advertising revenue that search currently produces. The decline also intensified broader concerns that the cost of the global AI buildout may be running ahead of its eventual returns. Alphabet’s shares were on pace for their worst monthly performance since the depths of the financial crisis, while the Nasdaq fell 1.4% and the Dow and S&P 500 also closed lower. The episode presented the market reaction as both a company-specific concern about search and a wider question about whether massive technology investment will pay off.

DoorDash agreed to buy Instacart for about $17 billion in cash and stock, making it the delivery company’s largest deal in its 13-year history. The acquisition gives DoorDash a major grocery-delivery partner and strengthens its effort to become more than a restaurant-delivery service. DoorDash already delivers products such as dresses from Macy’s, paper towels from Costco and cold medicine from CVS. Adding Instacart gives it a stronger platform with which to compete against Walmart and Amazon. DoorDash said it expects to keep Instacart’s brand and app after the transaction closes, which is expected in late 2027 or early 2028. DoorDash shares rose more than 5% after the announcement.

Alaska Republican Governor Mike Dunleavy ordered an investigation into alleged election manipulation in the state’s Senate race just days before the midterms. The investigation followed a New York Times report that staffers for Democratic candidate Mary Peltola worked to recruit an independent candidate who shared the name of incumbent Republican Senator Dan Sullivan. Critics say placing two candidates named Dan Sullivan on the ballot was intended to confuse voters. President Trump had already called for Peltola to be criminally prosecuted, and the Justice Department sent dozens of new grand-jury subpoenas in the existing federal investigation. A Justice Department official said prosecutors are examining whether to bring charges alleging a conspiracy to violate voters’ rights. Peltola’s campaign said it had “no involvement with either Sullivan campaign.” The race is closely watched, but the episode said it remains unclear whether the controversy will change voters’ minds.

WSJ national political reporter Eliza Collins said Donald Trump’s 2024 victory was broader than his 2016 coalition. His Republican base remained with him, while independent voters and suburban women who had moved away from him in 2020 returned. He also improved among young voters—particularly young men—Hispanic voters and Black voters, and attracted a new group of “Maha” voters. That combination helped him win all the swing states and outperform his earlier election result. Collins said that, aside from Trump’s core base, nearly all of those groups are now up for grabs in the 2026 midterms. She pointed to toss-up races in states that Trump won by double digits, including Alaska, Iowa and Texas. Hispanic voters in Texas told Journal reporters that Trump’s immigration and border-security agenda had gone too far: they wanted more border security but were unhappy with deportations. Maha voters expressed frustration with policies including protections for pesticide makers and environmental rollbacks. In a Journal panel of young Gen Z voters who had all backed Trump, half said they regretted their vote. Farmers have also become an unexpected swing group after being hurt by several policies, especially tariffs. Collins said Iowa’s Senate and governor’s races are competitive, as is Kansas, which has not elected a Democrat in decades. Voters told reporters that tariffs were making goods more expensive and that the war with Iran was contributing to higher gas prices. Collins argued that Republicans now have a harder time blaming economic pain on someone else because they control the White House, House and Senate. She concluded that Trump’s approval rating has fallen across demographic groups and that the entire coalition is potentially available to Democrats.

Commerce Department data showed that U.S. GDP grew at a 3.4% annual rate in the third quarter, the fastest pace in a year and above analyst expectations. Economics reporter Konrad Putizer said the result was striking because consumers continue to spend even while they report feeling pressure from inflation and express pessimism about the economy. Consumer spending was the single biggest contributor to growth. Business investment, especially investment tied to artificial intelligence, was the other major driver. Putizer said some estimates attribute one-third of GDP growth to AI investment, an unusually large share for one area of high-tech spending. It still did not exceed consumer spending’s contribution, but it came close enough to be remarkable. The report also showed that U.S. national debt had reached 100% of GDP, the first time it had reached that triple-digit level since 1946. Putizer compared the current figure with 1946, when debt was high because of the cost of World War II; this time, he noted, the country is not in a world war or recession. He said the debt level is not sustainable over the long run, while also explaining that government deficits can support short-term growth because the government is spending more than it collects in taxes.

The host asked whether the strong economic data would reinforce investor expectations that the Federal Reserve will raise interest rates at its next meeting. Putizer said Fed Chair Kevin Warsh had described the economy as strengthening and doing well at the previous day’s press conference. Putizer argued that the latest data support that assessment: the economy is growing strongly, consumers are continuing to spend despite rising prices, and inflation remains well above the Fed’s target. Taken together, those conditions suggest that current interest rates may not be high enough to bring inflation down. He therefore said there was a good chance the Fed would raise rates at its next meeting. In Europe, European Central Bank President Christine Lagarde announced that she would leave her post a few months early, in February. She said the decision was motivated in part by a desire to speak more openly about world affairs. European governments have begun maneuvering over her successor as debt problems and persistent inflation weigh on the economy. The ECB held rates steady after her announcement, though investors widely expect it, like the Fed, to raise rates at its December meeting.

The episode closed with a lighter discussion prompted by former President Barack Obama’s joke that President Trump had made the White House look like “Saddam Hussein opened the Cheesecake Factory.” Obama then clarified that he likes the restaurant and called it his “jam,” adding that, as the father of two daughters, he could not have survived their childhood without visiting one. Food trends columnist Adam Chandler described the Cheesecake Factory’s design as an extension of its famously oversized menu: gaudy finishes, murals, bright soaring ceilings, paintings and a generally chaotic mix of styles. The first Cheesecake Factory opened in Beverly Hills in 1978, and Chandler said the chain is the highest-grossing major restaurant chain by average unit volume. He attributed its success to the way the decor and menu create a fun, excessive experience, with something for everyone, enormous portions and enormous calorie counts. Chandler compared the look to an early-2000s aesthetic because it combines European touches, Egyptian columns and gold finishes without following one coherent design ideology. Unlike chains that regularly update their interiors, the Cheesecake Factory has kept the same basic look, making the decor part of its identity. Chandler’s preferred order is the Louisiana chicken pasta, which he noted is not authentically from Louisiana or anywhere else but is spicy and filling.