The real 3Q GDP growth is ONLY 0.75% (without Cash For Clunkers)
By Daniel at 23 December, 2009, 9:11 pm
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So yesterday we learned that the “recovery” wasn’t quite as strong as we originally supposed. In fact, when you dig through the numbers it didn’t amount to much at all.
First, the facts. Third quarter GDP growth was downgraded from 3.5% (the initial estimate) to 2.2%, the current estimate. In between, it temporarily was placed at 2.8%. To add salt to the wound, the contribution from automobile sales is estimated to account for 1.45 percentage points of the 2.2% (link). Remember Cash For Clunkers? Without that artifice we would have seen growth around 0.75%. That in a quarter when fiscal stimulus was starting to stream into the numbers.
Let’s quit calling it recovery. We are in the throes of a very deep recession, the likes and type of which we have not seen before. We may even be in a depression but won’t recognize that fact until the historians describe it thusly several decades from now. The point to keep in mind is that all of the talk of recovery is really just definitional. We have stopped shrinking ergo we must be recovering.
Richard Posner had some excellent thoughts on this line of reasoning:
http://seekingalpha.com/article/179545-stop-calling-this-recovery
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