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I found this article interesting but I am also skeptical.
"The economy grew at a rate of 5.6% in the final quarter of 2009.
Part of the reason for the slower growth was reduced government spending and a fall in exports."
What exactly are these rates based on? Are they accurate or is there a bit of cooking in those numbers? Could the previous quarters higher rate be attributed to the holiday season when people spend the most? Obviously, longer term growth signals, such as a drop in unemployment have not come yet. And can we truly recover with the interest rate being basically 0?
While it doesn't say it directly I would bet this is GDP, and I believe it. Eventually people had to start buying again and with the growth in the financial sector (savings contribution to output) I am not surprised the economy is growing again. It will be a while before we stabilize out (assuming we stabilize out and don't after a 1937 styled second recession) to a 3-4% growth that we had before. To me, what would be much more interesting is growth in the industrial sector, falling unemployment, and real growth in investment (industrial investment). However, I do suspect we will see growth in each of those areas in the next few quarters.
ReplyDelete-Tommy
I think it's a good sign that government spending decreased. While government spending can keep the economy afloat it is just a temporary fix to the situation. I think as consumer confidence continues to grow consumption and then investment will increase. In this respect, I believe low interest rates are attractive to firms wishing to invest in the United States and while it's not sustainable it is important to initially attract new investor and new jobs.
ReplyDeleteIt is great to see that there is some growth in the economy. Even if these numbers are a little misconstrued at least they are positive and not in the negative. It will be interesting to see if and when unemployment will decrease and hopefully that will be soon. Then we could maybe consider that the economy is starting to recover but who knows we could end up back where we were after reading this week because the banks have not been forced to change their behavior.
ReplyDeleteIt is good to see something positive in the news about the US economy. Its also good to see that exports were decreasing hopefully more manufacturing jobs will be created and domestic production will continue to rise. With all of the negative news regarding wall street and the aftermath of the financial crisis it is comforting to see that we are at least on the right path for recovery and that some consumer confidence is being restored.
ReplyDeleteGreat to see some positives signs about the economy..This isn't surprising though because this is what was predicted. Hopefully it can continue to improve.
ReplyDeleteIt's nice to see the economy moving back up, but all this seems to be is recovery as we are still trying to get back to what we were at before. I think a better number to show and be happy about would be to see growth in comparison to where the economy was before the crisis
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