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The Beginning Of The End?

Rodney just posted a brief item about the "end" of the current deep recession -- the Commerce Department officially reported 3.5% growth in the economy during the third quarter of 2009. No doubt Vice President Biden is already preparing to take full credit for this surprising announcement.

But perhaps a little context is in order before we start celebrating. While it is good to see a few "green shoots" signaling that the economy is beginning to rebound, we are still in a recession. Even though we may have stopped digging, collectively we are standing at the bottom of a very deep economic hole. Assuming that the government doesn't start the digging process again with another ill-conceived trillion dollar boondoggle, it will take years, perhaps decades, for us to climb out of that hole.

Nationwide unemployment is still teetering under 10%. For millions of families, stock market losses and unemployment have drastically eroded savings and retirement nest eggs. New home sales fell in 3.6% September, the first decline since March of this year. Even though the economy grew slightly, residential home foreclosures reached an all-time high during the third quarter of 2009. Consumer confidence also fell significantly during October.

I'm not trying to throw a wet blanket on economic recovery; my family needs it just as badly as everyone else does. But times are still tough, and the decline in consumer confidence is a clear signal that the American people still have not seen any measurable economic recovery. Specifically, they are not buying the Administration's silly "jobs saved or created" claims, since they can see with their own eyes that businesses are still laying off far more people than they are hiring, and that small, family-owned retail stores and boutiques are struggling to stay open. And as Paul Mirengoff just noted, if the Bush tax cuts are allowed to expire at the end of next year (meaning, of course, a net tax increase for everyone) then the recovery curve may be flattened out even more.

Banks and financial institutions, which received hundreds of billions of dollars in government aid during the last twelve months, seem to be doing quite well. But for the rest of us, a "jobless recovery" is really not a recovery at all.



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Comments (18)

An end to the recession is ... (Below threshold)

An end to the recession is good in the sense that it's good when the economy stops shrinking. But, as you point out, that's not the same thing as recovery. And that won't happen until businesses start hiring, and unfortunately, I don't see that happening for some time to come (combination of fear of a double dip recession and regulations that make it easier to meet demand through overtime and improved productivity than by hiring new staff).

We're definitely turning th... (Below threshold)
Steve Green:

We're definitely turning the corner. Cheer up - maybe there will be a major downturn from here.

/sarc

It's a statistical recovery... (Below threshold)
John S:

It's a statistical recovery. The numbers look positive because they are compared with the big economic meltdown of one year ago. And companies are rebuilding a small part of the inventories they liquidated last year. So I hope Joe Biden takes full credit for this "recovery." Then as the economy continues its slide next year it becomes Obama's recession.

With the unemployment rates... (Below threshold)
Zelsdorf Ragshaft IIIz:

With the unemployment rates as high as they are, just because a few people are spending a little money does not a recovery make. I do not trust this government and its minions to tell us the truth about anything. When you have a government which espouses a scientific myth such as AGW, why would you believe anything they say. Just look at what they are trying to pull with health care.

Yep, I will believe the eco... (Below threshold)
914:

Yep, I will believe the economy is recovering as soon as Obama is sitting back on Mechells lap and has been thouroughly trounced and unselected by us northern White supremacist conservative biGOTS..

I think you've summed it al... (Below threshold)
gary gulrud:

I think you've summed it all up pretty concisely.

The jobless numbers are a fatuous gloss, the positive financial news follows from free money and the fallen dollar, and an abysmal Xmas will blow much of the wasted investment, 'upturn', to dust.

Next year's bank failure rate will double, personal bankruptcies and foreclosures will rise once again.

Wonder when the poor and young are going to wake up to marginal tax rates and their direction?

" Rodney just posted a brie... (Below threshold)
Les Nessman:

" Rodney just posted a brief item about the "end" of the current deep recession -- the Commerce Department officially reported 3.5% growth in the economy during the third quarter of 2009. "
-
I hope it's true.
Keep in mind this admin's history of 'revising' econ-related numbers weeks or months after they are initially released. Coincidentally, those 'revised' numbers are usually worse.
We'll see.

there is an actual definiti... (Below threshold)

there is an actual definition of a Recession.

the START when you get "two consecutive quarters of negative growth"

they END when "two consecutive quarters of Positive growth"

I applaud and welcome the ONE quarter of growth. And if we get a SECOND quarter of growth then the recession can be safely said to hav ended.

IF, on the other hand, THIS quarter's growth was artifically induced (by the "Cash for CLunkers", et al) and is NOT sustainable...then the recession isn't over.

time will tell

Is the recession over becau... (Below threshold)
Matt:

Is the recession over because it is sliding into a depression?

I personally have my seriou... (Below threshold)
Paul Hooson:

I personally have my serious doubts about the recession ending. Very recent Gallup polling has stated a fresh round of lost confidence among consumers. Sales have been very weak at my grocery store recently as well. People that used to buy the daily newspaper now just "free read" the headlines and concentrate on food instead. My distributors also note a recent huge drop in new orders this week, even though the first of the month is just around the corner.

China has noted some recent economic growth, but that has been largely domestically, as exports to the U.S. continue to decline. Besides the recession, U.S industry has been in real decline pattern since the year 2000, with 9/11 in 2001 really accelerating the decline of the American economy. The American economy was fragile enough that this low budget terrorism effort managed to start the nation on a skid pattern. Now the U.S. has permanently lost significant economic ground to the EU and Chinese economy. The U.S. is now only the fourth largest automobile producer in the world and could eventually slip to fifth place.

Mr. Bush and Mr. Obama certainly entered office with good intentions for the American economy. But so far, the economic policies of neither have really worked to a high degree, although both are deecent men who mean well for their country.

Justrand,<blockquo... (Below threshold)
Kenny:

Justrand,

there is an actual definition of a Recession.

the START when you get "two consecutive quarters of negative growth"

they END when "two consecutive quarters of Positive growth"

That used to be the definition, but look at when this recession 'started', they had to add in a couple of growth quarters so they could blame Bush.

Doesn't surprise me that they'll change the ending definition as well to help Obama. Anything to help them hold on to power.

IF, on the other hand, THIS quarter's growth was artifically induced (by the "Cash for CLunkers", et al) and is NOT sustainable...then the recession isn't over.

You're on the money here. Other news today showed the cash for clunkers was half of that GDP growth. And how much was just pulling sales ahead from the next 2 quarters?

Then add in the inevitable (downward) revision next month. It doesn't look much like the end of the recession to me.


One of the very bad signs t... (Below threshold)
Matt:

One of the very bad signs that recovery, at least locally is a ways off, is that our local Super Walmart has informed charities it supports not to expect any help this year. No grants, or debit cards etc. Sales are down to far, the biggest dip has been in grocery staples. Sales of fresh dairy, eggs, cheese, fresh vegetables etc are way down despite prices holding or dropping.

It amazes me sometimes just... (Below threshold)
Deke:

It amazes me sometimes just how biased and manipulative the major news outlets can be sometimes. If this was another person, or heaven forbid, a Conservative in office, the reporting on the "recovery" would be much more critical.

The bottom line is the GDP is based on 3 factors C(consumption) I(Investment) S(spending) those 3 factors, when taken as a whole are a much clearer picture. Unfort., there was virtually no consumption, personal money is still tight and inventories are low, with no future plans to expand. Investment? Hardly! Lenders are still tight fisted and not a lot of ppl/business willing to take risks atm. What you are left with is spending. Now one has to realize that Government spending is taken in as part of GDP and what has the government done the last 1/4? SPEND! Between Cash for Clunkers, Home Buyers bonus and other nebulous spending programs, the drunken sailor analogy is rapt here, the government has "spent" up the GDP. Unfort., this is not sustainable and one has to wonder what will happen if the next quarter, especially with a poor Christmas season, is bad. Will the media spin this in the admin's favor also?

"IF, on the other ha... (Below threshold)
Les Nessman:

"
IF, on the other hand, THIS quarter's growth was artifically induced (by the "Cash for CLunkers", et al)..."
-

I thought I heard a report on the radio today that Cash for Clunkers cost $24,000 per car. Has anyone else heard that?
If true, that's outrageous.

Here you go, Les -... (Below threshold)
JLawson:

Here you go, Les -

Clunkers: Taxpayers paid $24,000 per car

The analysis is that a majority of the cars that were bought would have been bought anyway, and there were only about 125,000 that were bought that were a result of the stimulus. Therefore, the cost went to about $24k for each of those extra cars.

And considering how auto sales have been really down since the 'Cash4Clunkers' program ended, I'd say that the CNN analysis is right on the money...

"And considering how auto s... (Below threshold)
Les Nessman:

"And considering how auto sales have been really down since the 'Cash4Clunkers' program ended,..."

So about half of this much ballyhooed 3.5% 'growth' was due to the C4C scam. C4C won't help 4th Quarter growth.

Doesn't sound like we're out of the recession just yet.

Nice numbers, too bad they ... (Below threshold)
GarandFan:

Nice numbers, too bad they won't last. Funemployment is still with us. Newly unemployed numbers are still in EXCESS of what Barry and Company keep predicting. TOTAL jobless is about 17%. Heavy industry has not rebounded. Car sales are DOWN. Another Clunker program anyone? Housing sales are DOWN again, with talk of continuing the $8K giveaway to buy a new home. Builders HAVE NOT started new housing tracts.

Hey folks, get set for that SECOND DIP into recession PART TWO. And Barry will play hell trying to blame it on BUSH.

Hope is not a plan. This r... (Below threshold)
DocinPA:

Hope is not a plan. This recession is by no means over. We haven't stopped digging, either. This supposed "growth" is only the result of massive spending of freshly printed money. No jobs equals no consumer spending which equals no business investment which equals no jobs... Until the Marxists are evicted from Congress, this will not change. We need to get to work on campaigns, People!!




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