Reactions to return to positive GDP
You know where I stand on the new GDP number. Let's see what some other people are saying about this morning's news that U.S. GDP has returned to growth after four consecutive quarters of contraction. Especially note the contradictory views of the impact of the stimulus on GDP recovery:
-- Bart van Ark, chief economist of the Conference Board: "The expansion in Q3 GDP shows we have clearly begun to emerge from the trough. But there’s still a long way to go, and we still don’t know enough about the sustainability of these recovery signals. The comparatively good Q3 news is largely driven by temporary factors like an uptick in consumer spending ─ notably through the U.S. government’s 'cash for clunkers' car sales subsidy program ─ as well as an easing in inventory rundowns. Q4 could bring even faster easing in inventory rundowns that accounts for all GDP growth (we forecast 3.1 percent). Consumer spending will fall flat during the holiday season, and exports will recover more slowly than in Q3. Any modest uptick in investments in equipment and software will most likely be offset by continued declines in commercial real estate."
-- John Ryding and Conrad DeQuadros, RDQ Economics: "The expansion in GDP in the third quarter is further confirmation that the recession ended in the second quarter. However, we need many quarters of GDP running at this pace (or faster) to make significant inroads into reducing unemployment."
-- Josh Bivens, economist at the Economic Policy Institute: "In the six months prior to the effects of the [stimulus] the economy was contracting at a 5.9 percent rate. In the 6 months since, the economy has grown at a 1.4 percent rate. While it’s far too early to declare 'mission accomplished,' it is crystal clear that the [stimulus] was crucial in pulling the economy out of its tailspin and putting it on the path to growth."
David Greenlaw and Ted Wieseman, Morgan Stanley Research: “There is no way to make a precise determination of the impact of the $787 billion fiscal stimulus package that was enacted in February, but we suspect that the impact was quite modest — perhaps a percentage point or so. We continue to see a sustained but relatively subdued economic recovery ahead.”
-- Stuart Hoffman, Robert Dye and Craig Thomas, PNC: "GDP data for the third quarter of 2009 confirms that the ‘Great Recession’ of 2008 to mid-2009 has ended as a massive federal government stimulus engaged. Despite the improvements to national accounts, the after-effects of the recession linger on. For Main Street, the recession will end when the unemployment rate declines and house prices consistently improve. We expect these conditions to be met in the first half of 2010."
-- Steven Ricchiuto, chief economist at Mizuho Securities USA: "The major contributors to growth in the third quarter were those generally expected by the Street ahead of time but the magnitude of the gains were greater than expected. The fact that the economy exceeded expectations of a 3 percent rise means that the growth bulls will maintain their 3.5 percent fourth-quarter growth assumptions; however, the stress line in the economy showing through in the latest data still keeps my double-dip scenario alive. Now the focus shifts to the labor market and the upcoming auto sales numbers to assess the sustained ability of the rebound."
-- Peter Boockvar, equity strategist at Miller Tabak: "Personal consumption did bounce back by 3.4 percent, .3 percent more than expected and helped out by the [cash for clunkers] program as spending on durable goods rose by 22.3 percent. Helped out by the home buying tax credit, residential construction added .5 percent to GDP, the first time it's contributed to GDP since Q4 2005. Spending on equipment and software rose 1.1 percent, the first increase since Q4 2007. Federal government spending rose 7.9 percent, offsetting a drop in state and local spending."
-- Frank Ahrens
Sign up to get The Ticker on Twitter
October 29, 2009; 11:47 AM ET
Categories: The Ticker | Tags: Economic Policy Institute, GDP, Miller Tabak, Mizuho, PNC, recession
Save & Share: Previous: Stocks open higher on GDP bump
Next: Stocks open down on consumer spending news
The comments to this entry are closed.