The economy is showing signs of a slight bounce back, according to the report in Reuters on Oct. 29. The nation’s gross domestic product showed an increase for the first time in a year, according to the report. The increase in GDP can be attributed to a rebound in both consumer spending and new home building, the report stated.
The GDP grew at a rate of 3.5 percent annual rate in the third quarter, which has been the fastest advance since the first quarter since 2007. The last signs of growth for the economy were in the second quarter of 2008. Now, more than a year later and with consumer spending up to 3.4 percent at the end of the third quarter, Reuters declared this increase in GDP as “unofficially ending the worst recession in 70 years.”
According to the article, the number of new American workers claiming jobless benefits dropped by 1,000 requests in the past week. In addition, the number of Americans receiving long-term aid showed the lowest numbers in seven months.
Now that signs of a rebound are on the horizon, many problems, some more troubling than the brutal recession, will begin to develop. According to Tim Chriskey, chief investment officer at Solaris Assest Management in Bedford Hills, NY, this GDP rate is not enough to “tip the scale yet.”
Chriskey says that the Fed will not jump on the bandwagon to say that the economy is recovering, but will also not expect it to relapse again. He instead argues that they will behave more as “cheerleaders” for the economy and neither try to speed up the process or hinder it in any way.
On the other hand, Reuters reports Dan Cook, senior market analyst for IG Markets in Chicago, as saying that the economy will dip below zero again in the fourth quarter of 2009 and the first quarter of 2010 before growth is seen again. This dip, he says, will be attributed to the paring down of government programs by the Fed.
So if economist are crying wolf in a sense as to the meaning of the increase in GDP, then the American people shouldn’t consider their wallets safe anytime soon. If the economy is on the up and up, which the next few quarters will show, then it will be a slow process. The effects of this recession have reached far and wide throughout this country, and it will take months, if not years, to undo the damage that has been done.
Americans have lost jobs, homes, and savings. The American fortitude has worn thin, and the repairing process will be a long road of floundering government social programs and constantly fluctuating interest rates. However, if any step of this process is taken too quickly or drawn out too long the economy could falter and this increase in GDP will be nothing but a hiccup in one of the worst recessions in U.S. history.
