Here is some very good news on the economy.
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 5.7 percent in the fourth quarter of 2009,
(that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.2 percent.
I think this means that the recession is officially over because we now have had two straight quarters with economic growth. Of course, there are other considerations that factor into the definition of a recession, but 5.7% is a big number. With any luck, the unemployment numbers will start going down shortly.
I don’t see a reason to get excited, Goldman Sachs predicted 5.8%. This was highly predictable. In fact, we shouldn’t let anyone frame this as good news, because then that will give them fire not to pass a jobs bill.
it’s certainly not bad news.
It’s pretty much premature news. It looks like quite a few businesses have taken the bet on the economy. The tale will be told in the next couple of quarters. If they can sell that inventory build then there’s something to talk about. If not….??? There will be even more to talk about because those businesses will sink under that inventory.
An economist will look at this and say that it is NOT a great number. Most of it is an inventory build.
The scary part is that this GDP gain happened while employment was still falling. Productivity, I guess. That’s a two-edged sword if there ever was one. Basically it means they don’t need more employees to raise output. Next step is to see if they can sell that inventory.
Yes, but wouldn’t there be some hope of stemming job losses? It’s not ideal, you’re still sinking over 100K a quarter from new entrants (me…. shit) but I’ve heard from 2.3-2.9% non-inventory growth which is not horrible. Not good, but not horrible.
But every bit of that (OK, some hyperbole there) likely reflects corresponding debt. A good deal of that is government debt: money borrowed to extend Unemployment; whatever effect the “stimulus” may be having, etc. GDP doesn’t care about debt. In other times debt may not have been a big deal. Now, however, the debt is massive and it extends to households, businesses, government at all levels…
I’ll care more about government debt when inflation starts actually becoming a threat.
Part of a recovery for businesses is attitude and when they see the door opening, even just a crack, for the recession to be ending, that attitude goes a long way toward adding jobs.
Since I remember the ’80’s recession and how it took nearly 8 years for us to pull out I haven’t been that confident that our economy would catch fire again for several more years, and maybe that’s why a part of me is cheering this uptick on, the sooner it’s behind us the better!
I’m keeping an eye on the possible $5k tax credit, if they structure that right it should provide a decent boost for small businesses and startups.
The recession isn’t over until the NBER declares that we are heading back from a trough to a peak. That of course is done way after the fact.
Unemployment numbers will start going down when employers expect expanded consumer demand and do not have ways other than hiring to fulfill that required production. Which is much dicier in a post-industrial economy than it was in an industrial economy. Watch the work hours and overtime hours figures to get a hint of when this might be.
Meteor Blades has an excellent analysis of the implications on the Orange One.
And 5.7% in a quarter would be a big number in a full employment economy, but it is not in a recovery from recession or during rapid economic development.
I don’t think this is true for recessions have some natural side effects, and for many people one of the first things in the firing line is vacations. Many decide to even forgo vacation time and take the cash instead, if their employer is willing to do so. Financial setbacks have occurred for so many, and the job market has been abysmal of late, with more people and huge companies running for payday loans. Discretionary spending has shrunk drastically, which has led to further shrinking of industries, and led to more layoffs, and it’s thought that this will reverse itself once more people return to a state of full employment.