Posted by
Defend America on Thursday, October 29, 2009 2:25:30 PM
Economy Expands 3.5 Percent in Third Quarter, Biggest Growth in 2 Years
The much-awaited turnaround ended the streak of four straight quarters of contracting economic activity, the first time that's
happened on records dating to 1947.
The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported
spending on cars and homes.
The Commerce Department's report Thursday delivered the strongest signal yet that the economy
entered a new, though fragile, phase of recovery.
http://www.foxnews.com/politics/2009/10/29/economy-grew-percent-quarter/
Now the explanation:
Growth Figures Demonstrate Economy’s Ultimate Resilience [J. D. Foster]
The
initial estimate pegging third-quarter growth at 3.5 percent is good
news. That’s the first substantial expansion in two years. It’s also
generally consistent with other data (e.g. a stabilizing housing
market, reduced rate of contraction in labor markets) suggesting recovery is at hand.
But don’t pop those champagne corks just yet. The fact is the
underlying trend growth was much less than the topline figure suggests.
For example, car purchases
added a full percentage point to the growth rate. Everyone expected the
cash-for-clunkers program to artificially pump up third-quarter
consumer durable purchases, by filching them from the future. That
future is now, and so auto purchases are likely to be anemic well into
2010, especially as unemployment continues to increase.
Similarly, whatever small effect the $8,000 first-time homebuyers tax credit
had on housing, it too served only to pull purchases into the third
quarter and reduce such buying well into 2010. Residential real estate
swung from subtracting almost 0.7 percentage point to adding 0.5
percentage point. Expect this to strength to evaporate, especially as
mortgage rates are now climbing.
http://corner.nationalreview.com/post/?q=MjFmNDg4OTQ4YTQ0MzQ1Nzk2OTc0ZDY2ZTU5YjYyNTI=#at