Ameican Economy Grows for FIrst Time in Year

money.cnn.com/2009/10/29/news/economy/gdp/index.htm

I’m not an economist, so I’m a bit confused. How can GDP grow if unemployment is up so high? Are the remaining people who are still working that much more productive? If anyone has a link that can explain this, I’d love to know.

On the upside, hurray for possible sign of economic recovery (in America, that is)?

I’m not an economist either. But I’m not sure economists are able to read this with any degree of certitude. One swallow, as they say, does not make a spring. GDP can go up momentarily for all kinds of reasons. Among the speculations some have are that the increased auto production due to “cash for clunkers” and programs like the “first time homebuyers’ credit” might have caused a blip on the screen. But, as some argue, those things are abnormal and do not point to a general improvement.

On the other hand, it could be more general than that, and point to recovery. But I don’t think anyone really knows.

Productivity per worker almost always goes up when unemployment goes up, simply because employers try to cut back expenses by laying people off, yet also try to fill their customers’ orders with a thinned-out workforce. Some believe that increased productivity is a good thing, notwithstanding that it’s painfully bought. But others think it’s just a numeric thing and has no other meaning.

If I had to make a guess (and being a businessman, I do have to) I would doubt there is any real recovery in the near future. Business people are extremely wary about what this government has in store for them in the way of increased burdens of all kinds; taxes, healthcare, penalties and high interest rates. At some point, the mysterious goings-on in this government will be better known and understood. There is some benefit in simply knowing things so you can take them into consideration in planning. But there is also a serious danger, as I see it, that the results of this re-engineering of the American economy will be so bad that businesses and other investors will simply adapt by refusing to take risks, resulting in a chronically high unemployment rate as far as the eye can see.

Essentially we are trading national debt for GDP. The GDP numbers look nice now, but have you taken a look at the latest budget deficit lately? :eek:

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