GDP Revised Lower; Will The Real Economy Please Stand Up
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Today third quarter GDP was revised down to 2.8 percent growth, versus the first estimates of 3.5 percent. Still GDP was a significant improvement from the 0.7 percent drop in the second quarter.
So which economy is the real one? Or did the government backed stimulus packages simply paint a pretty picture that is not real?
The facts remain that the unemployment rate is still rising to astronomical highs, coming in at 10.2 percent in the latest report. The housing market is moving along at a growth rate only noticeable under a microscope, still 30 percent below the high-water mark of April 2006. Consumer confidence is growing, but people still are anxious about what to do when it comes to going out and spending money to stimulate the economy.
The recession is still making its impact felt in many ways. The subdued news that the GDP was not in fact as promising as once thought should only add to a consumer outlook that will soon lose many of the stimulus initiatives that helped to spark spending on cars and homes.
Corporate profits rose during the quarter by 10.6 percent as companies increased production while cutting business costs. The increase was the largest in five years, but companies are achieving these numbers by letting go of employees, leading to the dramatic spike in unemployment.
While the data does still show that the economy is growing for the first time in more than a year, the revised numbers did reveal that consumer spending in the automotive industry in September was lower than previously expected.
The GDP growth was the largest in two years, the consumer is likely to remain sluggish as unemployment remains rampant and the reduction continues in government backed stimulus packages.
The fallout from the stimulus packages could result in less than sparkling numbers to come.
So which economy is the real one? Or did the government backed stimulus packages simply paint a pretty picture that is not real?
The facts remain that the unemployment rate is still rising to astronomical highs, coming in at 10.2 percent in the latest report. The housing market is moving along at a growth rate only noticeable under a microscope, still 30 percent below the high-water mark of April 2006. Consumer confidence is growing, but people still are anxious about what to do when it comes to going out and spending money to stimulate the economy.
The recession is still making its impact felt in many ways. The subdued news that the GDP was not in fact as promising as once thought should only add to a consumer outlook that will soon lose many of the stimulus initiatives that helped to spark spending on cars and homes.
Corporate profits rose during the quarter by 10.6 percent as companies increased production while cutting business costs. The increase was the largest in five years, but companies are achieving these numbers by letting go of employees, leading to the dramatic spike in unemployment.
While the data does still show that the economy is growing for the first time in more than a year, the revised numbers did reveal that consumer spending in the automotive industry in September was lower than previously expected.
The GDP growth was the largest in two years, the consumer is likely to remain sluggish as unemployment remains rampant and the reduction continues in government backed stimulus packages.
The fallout from the stimulus packages could result in less than sparkling numbers to come.
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