Economy finally back in gear
Government says GDP grew 3.5% in third quarter, ending a year-long string of declines and coming in better than forecasts.
Last Updated: October 29, 2009: 12:46 PM ET



Last quarter, the economy grew by the largest amount since the summer of 2007, but there are signs that things are still getting worse.

NEW YORK (CNNMoney.com) -- The U.S. economy grew at a 3.5% annual rate in the third quarter, ending a string of declines over four quarters that resulted in the most severe slide since the Great Depression. But some economists raised doubts about how long such strong growth can last.

The increase in GDP, reported by the government Thursday morning, was slightly better than expectations. Economists surveyed by Briefing.com had forecast 3.2% growth in gross domestic product, the broadest measure of the nation's economic activity. The economy shrank at a 0.7% rate in the second quarter.

The positive GDP report is one more sign that the economy has likely pulled out of the deep recession that started in December 2007.

The reading by itself doesn't mark an end to the recession; the economy actually grew in the second quarter of 2008. (The National Bureau of Economic Research, which officially dates the beginning and end of recessions, is not expected to declare that the current recession has ended until sometime in 2010.)

How stocks are reacting
But the stronger-than-expected growth is likely to lead more economists to declare that the economy hit bottom earlier this year and turned higher at some point in the summer.

Businesses continued to reduce inventories, but by a much slower pace than in the past. That helped to lift the overall GDP growth rate by nearly a full percentage point.

The slashing of production in jobs in the face of weak demand has been one of the strongest drags on the economy during the past four quarters.

Robert Brusca, an economist with FAO Economics said that the fact that businesses are still cutting inventories "tells us that the economy has not yet turned any corner very sharply."

But Bill Hampel, chief economist of the Credit Union National Association, said it's encouraging that the economy was able to grow at all without businesses actually rebuilding inventory. He said that is a positive sign of growth yet to come.

"The inventories still need to be replenished, and when they are, it will give us an even bigger lift," he said. "I don't think this report is a sign of a booming economy, but it does seem to be setting down roots that will be sustainable."
http://money.cnn.com/2009/10/29/news/economy/gdp/index.htm

Tentative good news.

During the Bush prez--They stoped telling us the amount of money the fed prints and circulates-- Some say it's messing up the inflation readings. Hell of a lot more money out there I think--how much is that loaf of bread anyway?? And thanks for the Poor thing on the other!

Your welcome.

I think mistakes were made and we are paying for them now. I am hoping that the economists that the president is utilizing for his information and decisions on the economy are well informed.

Hope your right--i tend to not trust either side. Been around long enough to see. went to one of there wars and it was Bull----! watched as things get tougher and worse. Little ups here and there but general decline. One of my problems is--they use the same people over and over. With the same ideas. Bush was the worst I've ever seen--sept maybe his pedifile old man!---not an OBAMA FAN EITHER. --Damn caps lock. I look at the keys when i type.. spellings not to sharp either. but you get the idea--disgruntaled old fart!!!

That's pretty much my sentiment! I wish people would go to the polls and vote against the incumbent to get new people in office.

I don't know if I'd bank on that. 1 quarter?

Where did the growth come from stimulas money?
Programs like CARS?
Housing credit?
When the government stops throwing our money away will the "growth" end?

Don't think you can tax and spend to get a great economy??? Romans tried it i think. Worked for a time--but not for ever.

We will have to watch and see. Tentative means with caution you know.

Yep!

I know what it means. And no where in the OP was that word mentioned.
So the media is giving people false hope .
I just wish the media wouldnt go making it sound like the recession is over.
Yes it's nice to see growth in the GDP but I don't think it's legitimate growth.
When unemployment starts droping drasticaly then I my believe it's turning around.

Indeed we watch and see. Thanks for the info Dragoness.

It seems the deeper i dig into economics, the more complicated it gets.

GDP growth is a good thing. But i am not convinced that our times have ended.

We created these economic bubbles when we artificially expand credit. This seems to be how they fight these bubbles as well. Lend more money. Problem is that inflates the bubble further. Sooner or later nature takes over, and inflated bubbles burst. (No matter how much air/money you put into it.)

You will see an temporary improvement when they change something relatively drastic about our monetary system. But, even then it's just a matter of time before something else needs to change.

BTW, i wonder who benefits from these economic bubbles in the end...

Perhaps this needs to be investigated.

I couldn't argue politics or financial concerns if my life depended on it but, I know that my work and my financial situation went to pot right after the inauguration.

and you are only one in how many?--lots

One of the first things i learned in college economics is that it takes 6 to 9 months (thereabouts) before legislation has any time to affect the economy.