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2009-10-30 09:35:38
President Barack Obama has welcomed the news that the US economy returned to
growth between July and September.
Official figures showed the economy grew by 3.5% during the quarter, its first
expansion in more than a year.
The growth was helped by a substantial government spending plan, including a
scrappage scheme to boost car sales.
While Mr Obama called it "welcome news", he said the US was still a "long way"
from recovering from the "deepest downturn since the Great Depression".
The return to growth of the world's largest economy also sent shares on Wall
Street sharply higher. The main Dow Jones index closed up 200 points, or 2.1%,
at 9,962.58.
Mr Obama said the figures were "an affirmation that this recession is abating
and [showed] the steps we've taken have made a difference, but I also know that
we've got a long way to go to fully restore our economy."
He said there were other benchmarks for measuring economic progress, such as
"whether we are creating jobs, whether families are able to pay their bills and
whether businesses are hiring and doing well".
Compared with the previous three months, the US economy grew by 0.9%. In the
same period, and on the same measure, the UK economy unexpectedly stayed in
recession after it shrank by 0.4%.
Global good news
Japan, Germany and France have recently climbed out of recession.
ANALYSIS
Michelle Fleury, BBC News, New York
The US, the world's economic powerhouse, joins Japan, Germany and France as the
leading economies that have emerged from recession.
While economists may be celebrating, it is too soon for the rest of us. The
recent weakness of the dollar won't help Americans buy goods from the rest of
the world and with the unemployment rate in the US currently at 9.8%, life is
still very hard.
Government schemes such as the "cash for clunkers" programme helped consumers
and manufacturers but given the weakness of the last retail sales data,
shoppers are still limiting their spending.
All the same, this GDP reading is a milestone regardless of how fragile the
recovery is.
BBC chief economics correspondent Hugh Pym said the 3.5% annualised growth rate
- which takes the change over a three-month period and works out what it would
be if it continued over a year - was better than expected by most commentators.
"The sheer scale of the stimulus in the US has made a big difference, it was
much bigger in percentage terms than that in the UK," he said.
It is the first time the US economy has expanded since the second quarter of
2008, when it grew at an annual pace of 2.4%.
US Treasury Secretary Timothy Geithner stressed times were still hard for
millions.
"Unemployment remains unacceptably high for every person out of work, for every
family facing foreclosure, for every small business facing a credit crunch, the
recession remains alive and acute," he said.
Official confirmation of whether the US is in or out of recession will come
from the National Bureau of Economic Research, the agency which considers a
number of factors in coming to its decision.
Numerous boosts
The figures from the Commerce Department showed that a number of factors helped
to lift the economy during the third quarter. HAVE YOUR SAY There can be no
genuine recovery, where there are no jobs. We continue to lose jobs, and none
are being created Rick McDaniel, Lewisville, TX USA
Spending on durable manufactured products soared at an annualised rate of
22.3%, the highest quarterly amount since 2001, led primarily by the impact of
the cash for clunkers scheme lifting car sales.
The housing market also improved, with spending on housing products up 23.4%,
its largest quarterly jump in 23 years.
Analysts said this big leap was sparked by the government's $8,000 tax credit
for first-time house buyers.
Meanwhile, total government spending was up 7.9%, as the wider stimulus
spending continued to take effect.
In addition, exports were also up strongly, increasing 21.4%, the biggest rise
since 1996.
'Distorted by stimulus'
"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."