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With third quarter GDP reported +3.5%, can we finally write off "The Great Recession?" Some have asked (including "The Greek") if government stimulus simply produced synthetic growth in Q3. After all, Motor Vehicle Sales made a 1.66 percentage point impact to GDP, and "Cash for Clunkers" was partly behind that. Since the end of the clunkers program, auto sales have tanked back to their nothingness. Christina Romer, the Chair of the Council of Economic Advisors to the President, indicated during an interview Saturday that the clunkers program probably added 0.4% to GDP.
Meanwhile, the First-Time Homebuyer Tax Credit is slated to expire at the end of the year. More importanly, history tells us that after an initial growth spurt on inventory build post recession, the economy often backtracks into economic decline for a quarter. Given the degree of initial economic decline this time around, and the fact that unemployment is flirting with double-digits and under-employment is nearing 20%, maybe it is still premature to sound the all-clear sirens to spend!? Consumers are not spending by the way, so how can a consumer driven economy grow while folks are hiding in their basements? Is a jobless recovery possible? Here's your chance to tell the world what you think:
Is the Recession Over?
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