GDP Probably Grew as Stimulus Took Hold: U.S. Economy Preview

[DuaneBidoux]

Source: Bloomberg

Oct. 25 (Bloomberg) -- The economy in the U.S. probably grew in the third quarter at the fastest pace in two years as government stimulus helped bring an end to the worst recession since the 1930s, economists said before reports this week.

The world’s largest economy grew at a 3.2 percent pace from July through September after shrinking the previous four quarters, according to the median estimate of 65 economists surveyed by Bloomberg News. Other reports may show sales of new homes and orders for long-lasting goods increased.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aDGvmWmB18w0

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Yes there's a way's to go, but statistically it will be recorded that the Great Republican Recession ended only 6 months after the Democrats came to power, thanks to a stimulus package that, in spite of flaws, helped the U.S. economy start to regain its footing.

Over and over again the right has mocked the stimulus package--but it has, and is, working. We will have avoided a Republican depression, and this we must never let anyone forget.

[bluestateguy]

1. I wish they wouldn't prognosticate like that

Now that means that if GDP only grows say 2.5% the market will tank.

[PSPS]

3. Unfortunately, it doesn't work that way

Unfortunately, it doesn't work that way. At least, not any more. The stock market is entirely "casino-ized" because the entire capital market consists of players who have nothing whatsoever to lose. You see, this is where Obama shoveled the $13 trillion of taxpayer money. Sure, there's now a stock price bubble, but any profits are limited to the few securities where these insiders can play. It's completely gamed, from front running to "trading" using taxpayer bailout funds (hence, no risk to the trader.)

With 25 million people unemployed/underemployed/given up looking (and counting -- the number is still going up every month,) we're in the Potemkin world of "green shoots" and "GDP probably probably grew." Yeah, sure it did. In what sectors? Where is this new or recovering domestic industry that can account for such a claim? There isn't any. This is worse than a "jobless recovery." It's a "job loss recovery." The money traders can surely make out like bandits since they're only using (and risking) taxpayer money and not their own. So they trade between themselves using, essentially, monopoly money which drives up stock prices. Sound familiar? It should. It's the same pyramid scheme of fake value that drove the housing-price bubble. Stock values are now completely disconnected from reality, just like housing prices were (and, in many cases, still are.)

So don't start popping the corks on those champagne bottles yet. It will be a very long time before we get out of this horrible situation. In fact, it's very possible that we'll never get out of it.

[AllentownJake]

6. It's nice to see DUers

Who know what is really going on with the stock market.

[renate]

2. I can't wait to read the books that will come out eventually

Our family took a serious hit from the recession--eleven months of almost no income--so this isn't voyeurism; I'm just looking forward to reading about how this administration managed to save the world. From my limited understanding, ending the recession seems nothing short of miraculous. (Of course, the next challenge will be restoring employment. I wonder how much can be done before the Republicans start screaming "Socialism!" about that, too.)

[Igel]

4. It's harder to fool NBER.

They neither slavishly follow the "two-quarter decline" nor a "two-quarter increase". Since a reasonable chunk of the "conclusion of the recession" is because of incentives to buy *now* instead of in a few months, NBER will wait to see what happens in 4th quarter.

The real question is whether or not the market distortion is so great as to have scraped enough GDP from 4th quarter to cause it to show a net decline. If so, the stimulus may well have artifically extended the recession.

Keep in mind that the determination of recession is based on lots of factors, though. The key is that a declining economy = recession. For this reason they even declared some periods of GDP decline as still compatible with net increase of the economy back in '07.

That analysis received a bit of criticism from some economists on the left. The reason for the net increase was due to increased * deficits. I fully expect them to act as though their former reasoning was completely faulty but not have the courage to actually say so.

[AllentownJake]

5. Well I would hope that 191 billion dollars would have some effect

Now the next step is building jobs that aren't dependent on Government spending otherwise when the spending goes away you are back where you started.

[TomCADem]

7. The Right Wing Will Deny That The Stimulus Helped Or Will Say It Would Have Done So Anyways