Economy Wars: Episode V - The GDP Strikes Back
The newest GDP numbers are out and they're -- dare I say -- a bit of green shoots.
Okay... Now that I got that phrase out of my system I promise to forever banish it from my vocabulary, for the good of all blog readers.
Now, let's take a look at the numbers.
Big top line number: The GDP was only down 1% in the second quarter of the year. This compares favorably to consensus forecasts of a 1.5% decline, and to the previous quarter's preliminary report that pegged GDP decline at 5.7%. Bernanke's beard audibly purred upon hearing the figures.
So there's a lot to be happy about, though the current number is subject to revision. After looking at previous quarterly declines of 6.4% (revised first quarter) and 6.3% in the fourth quarter, the number's a breath of fresh air. One factor that's driving the gains is federal spending, which was up 11% in the quarter. So what one person sees as the government using necessary means to escape from the recession, another will see as excessive spending that will hobble the US going forward. Let the debate continue!
Another story that's piqued our interest is the 'Cash for Clunkers' saga. The program, which was supposed to run through November, apparently has had its allotted $1 billion depleted in a few short days. White House officials and Congressional leaders are meeting to decide whether to continue with the program or not.
But I mean, come on, how many people in this country driving around clunkers really need new cars right now? To qualify for the program your car had to get less than 18 miles per gallon already (certain exemptions apply) and you'd only receive value for the scrapping of your car. So if a car was worth $5,000 or more on the secondary market, the program doesn't make any sense.
So let me prattle through who this program applies to: People driving cars with less than 18 mpg which are worth less than $5K and are willing to buy a NEW car right now?
I don't know... Seems to me we're enticing a lot of buyers who probably shouldn't be buying expensive autos right now to do just that.
Here's a Fool.com article that was written on the topic a couple days ago.
And finally, what's a blog post without more Jon & Kate news? Shockingly, despite being split up, the couple plans on continuing with their reality TV show. Ladies and gentlemen, START YOUR DVR'S.
-- Eric (TMFRhino)