The Beginning of the End

The Publius Forum ^ | October 30, 2009 | Dan Scott

[dscott8186]

To hear President Obama crow in vindication of his Stimulus Bill, one would think the light at the end of the tunnel is visible on the economic front. Obama has taken credit for the third quarter GDP growth of 3.5% as well he should. However, we need to examine what that growth was based upon and whether it was a bona fide growth of the economy or the counting of stolen booty.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment…

…Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change…

… Durable goods increased 22.3 percent, in contrast to a decrease of 5.6 percent. The third-quarter increase largely reflected motor vehicle purchases under the Consumer Assistance to Recycle and Save Act of 2009 (popularly called, “Cash for Clunkers” Program).

So nearly half of the third quarter’s increase was due to the temporary car stimulus. However, according to Edmunds, most of the car stimulus credit merely advanced car sales at the expense of the future months. By the way, the Whitehouse is claiming that’s a good thing. The result of this advance on car sales was to crater the car sales figures for September. October and November sales are yet to come and will similarly be as bad as September. In other words, they robbed Peter to pay Paul by advancing sales to one quarter in the deceitful attempt to proclaim the stimulus ended the recession.

[OB1kNOb]

GDP = private consumption + gross investment + government spending + (exports − imports).

I'd like to see what the number would be if one removed government spending from the equation, compared to last quarter. I suspect the result wouldn't be a positive number.

[painter]

...and what about the $8,000 first time home buyer check from the gov.. That runs out now,doesn’t it?

[Smokin' Joe]

To hear President Obama crow in vindication of his Stimulus Bill, one would think the light at the end of the tunnel is visible on the economic front.

Sometimes, the light at the end of the tunnel is an oncoming train...

[SampleMan]

GDP = private consumption + gross investment + government spending + (exports − imports).

For an individual this would equate to:

Cash spending + mortgage payments + IRA investments + credit card purchases + sales of goods - purchase of goods

With government spending equating to credit card purchases in the above equation.

Who thinks that merely increasing that number by increasing credit card purchases is a good indication of a person's wealth?

[NorCoGOP]

To hear President Obama crow in vindication of his Stimulus Bill, one would think the light at the end of the tunnel is visible on the economic front.

Sadly, Obama has confused it with the light of an oncoming train....

[dscott8186]

Actually government not that much.

http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=1&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Qtr&FirstYear=1947&LastYear=2009&3Place=N&Update=Update&JavaBox=no#Mid

Residential investment was up, namely houses and only because close to 40% of the sales were due to foreclosures and short sales. What’s driving the housing market at this time is strictly bargain priced housing which saves well in excess of any $8k tax credit offered by Congress. As the Brookings Institute indicated on 15% of the sales were due to the $8k tax credit (which has been extended now to April 2010). There are a new round of foreclosures in the pipeline, thus the housing component will continue to be modest.

[HighlyOpinionated]

If you repeat a lie often enough, people will accept it as truth.

There is no truth in Barry 0bama.