The biggest news of the week is no doubt the GDP numbers for the 3^rd Quarter of 2009.  Gross domestic product grew at a 3.5% annual rate, which means over the quarter the economy grew 3.5/4 = 0.875% which is actually a large amount for a developed nation.  When you consider we’ve had lower GDP numbers for a year then this is fantastic news.

Fantastic news maybe, but not surprising news.  When economic recovery occurs it’s usually preceded by the end of the recession, which means positive economic growth.  But the end of a recession is like coming out of surgery after falling from a window 100 feet above the sidewalk.  Sure you’re alive, and will survive, but you’ve got a long way to go before you’re back to your marathon training.  Unless another economic crisis brings us back down, the worst is behind us.

But now it’s time for physical therapy, and you have to relearn how to use your hands.  Unemployment has continued to rise over the quarter, despite the economy growing.  Though the rate of unemployment is slowing, we should crest the 10% unemployment rate (funny because this is one sign of depression).  GDP means nothing to my friends that will find out around Thanksgiving whether or not they’ll have jobs after the weekend.  GDP numbers mean nothing to the bean counters that will make that decision.

Of note, is that our economy has basically reset back 3 years to the 3^rd quarter of 2006.  Measured based on the S&P 500, we’ve reset back to October of 2004.  Hardly a cause for celebration.  Even better, much of this growth is funded by the government, using borrowed money.  Contributions include Cash For Clunkers, TARP, and various stimulus programs.  If private money continues to sit on the sidelines and not be invested, then we don’t have a recovery, just a shot of adrenaline.

Finally, GDP is a measurement of the past.  This was Q3 GDP, and Q3 is over.  That means from July through September, when we thought we were suffering, the economy was growing.  Did you feel good then?  Did your underwater mortgage get out of the flood?  Did your laid off husband find a job?  Probably not.  You don’t have anything to celebrate today that you didn’t have a few months ago.

But don’t let me take the wind out of your sails, I’m just a humble realist with an astonishing comprehension of the macroeconomic status of the United States.  Marinate on that for the weakend, and don’t forget to do your exercises, you’ll be in the hospital for a while.

By The Weakonomist

The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics.

categories: economics