Estimated GDP growth for the third quarter has been revised downward again, to 2.2% from an initial estimate of 3.5% (it was also revised downward last month). That means that the Cash-for-Clunkers program accounts for most of the growth:
Motor vehicle output added 1.45 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change. Final sales of computers subtracted 0.08 percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from the second-quarter change.
Take away that 1.45 percentage points and you get 0.75% growth – anyone want to bet me that other government spending accounted for most or all of that? I’ll bet dollars to donuts that the private, productive economy contracted in the third quarter – and is continuing to contract right now.
Its all smoke and mirrors, as I’ve said. It will come crashing down. Will it crash by March as I expect? No one can say for certain – but crash it will. Bank on it.
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