Nov 3, 2009
With the GDP growing by 3.5 percent in the third quarter, economists and market watchers are expressing a small sigh of relief. However, no one can deny that a lot of taxpayer money has been invested into the economy through tax hikes and this contributed significantly to the growth. The question is, how much can be attributed to the bailout and how much to the real economy? To find the answer to this question, it is essential to know what recovery really is.
Basically, there are three developments that are required to get the economy back on tract. The first development required is bank stabilization. Recklessness in the financial institution was a major cause of the recession. The turmoil in this industry started in August 2007 and reached its peak at the early autumn of 2008. The crisis has passed and the stabilization of the financial industry laid the foundation that allows the economy to heal. The second development is GDP growth. From the first paragraph, it is apparent that this has been met as well.
The third development that needs to happen is the job growth. Unlike the first two factors, it is slower to develop but it affects people’s lives more intimately than the first two. Even during the shallow recession in 2001, it took almost 2 years before job growth became positive once again. Another problem in determining what the real “job growth” really means is unreliable data. For example, the government released new figures that said the stimulus package “created or saved” more than a million jobs.
These data was collected from agencies that received funds under the American Recovery and Reinvestment Act of 2009. Unfortunately, the figure is not reliable because of reporting basis. Recipients feel encouraged to inflate the number of “jobs” they created in the race for federal money. It would be misleading to take the numbers at face value. The unemployment rate stands at 9.8 percent, few are comforted that a million jobs were said to be “retained”.
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- Is A Second Stimulus Package “Necessary”?
- The New Personal Finance Culture in America
- Banks Bracing to Fight against Strict Government Regulations
- The New Reality About Consumer Spending Habits
- Middleclass America: Going, Going, Gone