It is being reported today that the GDP expanded 3.5% in the third quarter. That seems to be a good sign, but don’t start singing “Happy Days Are Here Again!”! I question how much of this expansion is due to the government getting out the taxpayer’s credit card and artificially and temporarily expanding the economy. By one estimate that I heard recently as much as 10% of our economy is derived from an ever expanding national debt.
Last quarter was boosted by the $24,000 that was spent per car on the cash for clunkers program, the $8.000 being given to fist time homeowners (artificially inflating home values), and thousands of other programs financed by the $1.8 TRILLION ($1,800,000,000,000) that Washington added to the national debt this year. The White House has admitted that the stimulus’s greatest impact has already been achieved and the stimulus will have little impact next year. (click here)
Unemployment figures are now becoming worthless because the rates do not reflect people that have slipped out of the government’s unemployment lifeline or have been transferred to extended unemployment benefits. They are predicting that unemployment will remain at 9.6% through next year.
Holiday sales will illuminate the true state of the economy.