Free Markets, Free People
GDP Growth – Real or Memorex?
My guess is you’re looking at GDP numbers that are about as accurate as the stimulus saved and created job numbers the administration put out recently. Or perhaps a better way of saying it is they’re as deceptive as those job numbers.
The GDP is the combination of consumer, investor and government spending. We know pure consumer spending is down. We know that investor spending is down. And we also know that government spending is way up. That spending has spending has urges some consumers to spend – cash for clunkers and the $8, 000 incentive for first time home buyers. But a spurt of government spending which encouraged a spurt of consumer spending does not a recovery make:
The nation’s gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, matching the economy’s average annual growth rate from the last 80 years. But the end of government programs to encourage spending on things like cars and houses, alongside employers’ continued reluctance to hire more workers, means the recovery may not last, economists say.
The recovery will happen when investors invest, businesses hire and finally, consumers buy – not for a quarter, but in a constant and increasing manner. Until that happens, until we see the job numbers begin to lessen considerably, this is just a lot of hoopla over a quarterly blip driven by government spending.