According to estimated figures released on Thursday by the Commerce Department, the U.S. economy grew at an annual rate of 3.5 percent in the quarter from July through September.
If the figures released by the Commerce Department prove to be accurate, and there would seem to be no obvious reason why they should not be correct, it will mean that the worst recession in the U.S. in over seven decades is at an end.
The
National Bureau of Economic Research, a private nonprofit nonpartisan organization, usually confirms when exactly a recession ended and it may still be some time before the Bureau verifies that the recession which began at the end of 2007 is over at last.
As
RTE Business confirms the U.S. economy has not grown since Quarter Two of 2008 and was still contracting in Quarter Two of 2009, at a rate of 0.7 percent.
Expectations in the market were that Quarter Three would show growth of 3.3 percent and with the figure from the Commerce Department coming in higher than expected, and profits announced by Procter & Gamble Co and Colgate-Palmolive Co. doing the same, in morning trade the S&P 500 index of U.S. stocks began to recover some of the losses it has suffered in recent days.
Reuters reports that an appetite for risk returned to the markets, with the price of U.S. government debt and the value of the dollar falling accordingly.
The government stimulus package, which has reportedly led to an increase in both consumer spending and home building, is said to be responsible for much of the growth that has occurred. But President Obama and Treasury Secretary Timothy Geithner have emphasized that for many people, such as those without work and small businesses struggling to obtain credit, the recession is still very much alive.
Economists appear reasonably optimistic that a recovery has indeed arrived. However there is a recognition that once the government stimulus package has run its course a lower level of growth will likely prevail.
Harm Bandholz, economist at UniCredit Markets and Investment Banking in New York, is quoted by
Reuters as saying:
The economy has emerged with gusto from the deepest recession since World War Two. The short-term prospects for the economy remain good
Whilst the chief economist at FTN Financial in New York, Chris Low, noted:
The economy is entirely dependent on federal deficit spending at the moment. But the stimulus will not fade right away ... that means we can rely on solid growth continuing through the first quarter of next year. Once the government steps aside, growth is likely to fall back to a 1-2 percent rate of growth
The Cash for Clunkers scheme, which ended in August, made a large contribution to the growth seen in Quarter Three. Without it the growth rate would have only stood at 1.9 percent.
Exporters were assisted by the weaker dollar but a rise in imports had a negative impact on real GDP in the quarter.
Whereas spending by the federal government was a plus for the economy state and local governments were, in the words of
Reuters, "a drag".
A fall in business investment was another negative. Yet a fall in the rate at which businesses were liquidating inventory aided growth significantly.
Figures emanating from the Labor Department on Thursday revealed a higher than anticipated number of workers in the U.S. filing new claims for unemployment benefits. That bad news was countered by a decrease in those forced to claim benefits for a second week.
Japan and Germany had positive news on Thursday also, the former country seeing a rise in industrial output in September and the latter a fall in unemployment in October.
Outlook India reported on further good news from Europe. Business and consumer confidence in the 16 nations on the euro is now at its highest level since the collapse of Lehman Brothers in the Fall of 2009.
