Economy finally back in gear (?)

Government says GDP grew 3.5% in third quarter, ending a year-long string of declines and coming in better than forecasts.

NEW YORK (CNNMoney.com) -- The U.S. economy grew at a 3.5% annual rate in the third quarter, ending a string of declines over four quarters that resulted in the most severe slide since the Great Depression. But some economists raised doubts about how long such strong growth can last.

The increase in GDP, reported by the government Thursday morning, was slightly better than expectations. Economists surveyed by Briefing.com had forecast 3.2% growth in gross domestic product, the broadest measure of the nation's economic activity. The economy shrank at a 0.7% rate in the second quarter.

The positive GDP report is one more sign that the economy has likely pulled out of the deep recession that started in December 2007.
money.cnn.com...

I wonder how much of that is government spending?

I wonder how much of that is government spending?

Exactly

As you, for sure, know GDP is found by C+I+G+(X−M). C being private consumption of goods/services, I is the gross Investment in the market, G is government spending and X-M is the net exports (which is a net import currently).

The G component has contributed quite a bit to the GDP.

Also, look at the consumption levels, which make up the bulk of the incline. It makes up around 70% of GDP. A lot of the incline is due to government programs that temporarily artificially inflate the consumption. Cash for Clunkers is an example. The idea is the momentum given from these programs will carry us out.

But is this likely to be the case?

People are going to default on their car loans because they were sold cars they could not afford at a cheaper price they still couldn't afford. This is like a mini housing bubble. Many of the people that consumed products with the use of the stimulus program money have already lost their jobs and many more will.

GDP is up...... and so is unemployment. It sounds like the the 70s all over again. All we are waiting for is the inflation to hit the price of goods.

CNN Money have a really good breakdown on the current state of things.
money.cnn.com...

Taking a look at things, one image stood out for me. It scared me a little.

[atsimg]http://files.abovetopsecret.com/images/member/c21ed9a67812.gif[/atsimg]

And I guess im not the only one. According to the site:

Where we're headed: Stocks have rallied at a torrid pace since March, even though the economy has shown only tepid signs of recovery. Stock market predictions are notoriously unreliable. Many analysts think that stock prices are too inflated and that the market is due for a correction.
money.cnn.com...

reply to post by beta.services



that graph tell us something we don't wish to face.

equity markets are over priced
financial systems are on life-saving procedures
commodities & real asset prices are nearer reality than are equities

see:
www.theinternationalforecaster.com...

for a better synopsis than i could make,

thanks