Distorted by stimulus

Posted under Uncategorized by admin on Thursday 29 October 2009 at 10:37 am

“It’s good to have the economy growing again,” said Brian Bethune, economist at IHS Global Insight.
“But we don’t think that rate of growth is sustainable because it is distorted by all the government stimulus.

“The challenge here is to get organic growth - growth that isn’t helped by fiscal steroids.”

Analysts cautious about the slow nature of the US economic recovery point to the fact that the unemployment rate currently stands at 9.8%, and that the labour market traditionally lags behind any wider economic recovery.

They also highlight the fact that the big car firms have already reported a sharp fall in September sales following the conclusion of the popular $3bn cash for clunkers scheme at the end of August.

“You can say that the recession is over, but it sure won’t feel like that,” said Dean Baker, co-director of the Centre for Economic Policy Research.

“There is a lot of downward momentum that isn’t going to go.”

1 Comment »

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