Now what for the economy? More government stimulus?

Now what?

The economy expanded at a surprisingly strong 3.5 percent rate in the third quarter. It’s also likely to post a decent gain in the fourth quarter, although not as strong, according to many economists.

Much of that growth can be attributed to government spending, namely from Uncle Sam.

But federal programs to encourage consumer spending on cars and houses are expiring.

What’s more, companies remain reluctant to hire. In fact, most economists expect unemployment to continue to rise into next year. That could cause the economy to limp along for quite some time.

So should the government do more to stimulate consumer spending and business investment,  such as extend the home-buyer tax credit and pump an extra $250 into seniors’ bank accounts? Perhaps, a tax credit for expanding businesses?

Or has the deficit grown too large already, meaning we’ll just have to tough it out until consumers and businesses return to the driver’s seat?

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16 comments Add your comment

clyde

October 30th, 2009
9:20 am

The deficit is out of control.Enough government spending all ready.Cease and desist.Let this economy get to it’s bottom.It isn’t there yet.Artificial growth caused by government spending can’t be sustained.We cannot keep printing money like there’s no tomorrow.We are simply postponing the inevitable by more stimulus.Let’s get this over with.

Kashi

October 30th, 2009
9:20 am

Everything go thru cycle, check n balance, deficit is just too large and dollar value going to hit lowest ever years to come. Let wall street fail.

Concerned Georgian

October 30th, 2009
9:56 am

I consider this current crisis as an economic correction. This country will rebound eventually; however, our spending habits will change dramatically.

Randy

October 30th, 2009
10:03 am

We are still in the recession despite the GDP. It was a false reading due to the cash for clunkers,8000 house payment tax credit and the appliance tax credit pushed durable goods way up.Over 10000 home are in foreclosure in Marion County Indiana.Unemployment numbers do not paint a true picture since so many are losing benefits and so many don’t even qualify in the first place.

joe

October 30th, 2009
10:06 am

It all started in the financial sector and they continue to weigh down the recovery. Once the “talent” (ha!) leaves Wall Street and new blood moves in we will see banks ready to loan and businesses ready to hire and expand. Unfortunately this will take a while to cycle through, but I think we are on the right track cutting salaries of these hogs. I also agree that our spending habits will change (and rightfully so), meaning it will be an even longer, slower recovery. Let’s hold back on further stimulus until we see how the “new” Wall Street behaves.

ugaaccountant

October 30th, 2009
10:21 am

Well when the economy goes down for awhile, it’s easier to post modest gains that won’t get us back to where we were for a long time.

The idea of more government spending be the right answer is simply laughable. The rate of government spending is unsustainable, even in the short term of the next 3-7 years.

ugaaccountant

October 30th, 2009
10:27 am

I don’t know people who had “irresponsible” spending habits. Most people I know are highly educated and only had debt for college or housing. Now even these people who have done everything they could to be responsible and ideal employees are struggling to hold jobs.

If some answers aren’t found soon, the country is in danger of losing it’s status as the land of opportunity. First idea is less government spending to reduce the tax burden. It’s now time to focus our government spending domestically not abroad. We can’t solve the world’s problems and ignore our own.

Jimmy62

October 30th, 2009
10:36 am

You said it yourself. Our growth is primarily due to government spending and this is not sustainable. We need growth due to businesses, not government, or we’re never going to get out of this. The government should stop taking money from individuals and businesses to then spend on stimulus, and instead let those individuals and businesses spend the money themselves. They will spend it more wisely and based on their actual needs instead of what some random politicians think we need.

From what I can tell, every positive economic indicator we are seeing today comes with a major caveat. And every negative indicator is getting downplayed or ignored by the Administration and much of Congress, in their hope to look like all their fumbling is actual helping things instead of increasing uncertainty and thus delaying growth.

ugaaccountant

October 30th, 2009
10:46 am

How is it a positive sign that some of the poorest people in the country, those driving cars worth less than $4,500 have now taken on additional debt for assets that are almost immediately worth less than they paid for them? Does Obama not realize the defaults that will be coming on these cars?

Now would be a good time to be in the repossession business.

I'm a Man, I'm 40

October 30th, 2009
12:41 pm

Obama is a horrible president, he should be fired.

RGB

October 30th, 2009
1:50 pm

As Victor Davis Hanson said:

“I hope I am wrong….and that human nature really has magically changed in the era of Obama. So close your eyes, listen to the Messiah’s voice, and repeat:’Debts will be forgiven by creditors; inflation will not follow from massive borrowing; breakthroughs in solar and wind will power our cars and heat our homes; enemies will admire our compassion and join us to achieve world peace; and terrorists are either misunderstood or provoked needlessly by our bellicosity that alone stands in the way of peace.’

Believe all that and you can lie back and enjoy the age of Obama.”

DO THE MATH

October 30th, 2009
2:34 pm

It is doubtful the economy ‘really’ expanded in the third quarter. If you extracted the Fed spend/stimulus and cash for clunkers and energy tax credit purchases what would the real number be? Continuing to ’spin’ the numbers is not going to help.
We have almost 20% unemployment with nearly 10% getting unemployment benefits.
Foreclosures are continuing at an alarming rate.
Between 300-450,000 jobs are being lost each month.
The, Stimulus money=Jobs creation needs to go under the microscope again as it is doubtful the number of jobs created or to be created is accurate (even though it was revised to half of what was originally projected ) Have a look at the waste http://www.recovery.gov/Pages/home.aspx
The debt would have been palitable had it been used for things we need or will need over the next ten years; more jails, prisons (state and Fed.), airports, nursing colleges, JR colleges, border patrol and (coast guard which they did just spend money on).

ugaaccountant

October 30th, 2009
2:46 pm

You are right. The way things are going, we’ll need more jails and prisons soon because people will get really desperate.

GaNative

October 30th, 2009
3:02 pm

LOL @ ugaaccountant comments about this country losing it’s status as the land of opportunity. In my humble opinion, that has already happened. The only opportunity I see is for those holding H-1B Visa’s coming to America. They get the jobs, american citizens get to sit at home.

OMIPS

October 30th, 2009
6:33 pm

What now for the economy? Well, all of us make up the economy. So, the real question is – What now for you and me? Here are some of my thoughts:

Somehow or another we’ve got to get people back to work. Without people working and contributing to the economy we are going nowhere but down. When you look at impoverished countries you see people who are not working and because the people aren’t working these countries do not have strong economies. So, putting aside healthcare, social reform, and rest of the Obama agenda we have to get people back to work. And, that is back to work at real, sustainable jobs. Not some stimulus package, flash in the pan, make work job.

Next we have to reform government, taxes and legislation so that these do not inordinately hinder business and more importantly hinder the creation of real sustainable jobs. Over the past dozen years corporations have been on a roll of outsourcing domestic jobs to foreign countries. The driving force behind this is wages. Four dollars and twenty cents an hour in Mexico is certainly more attractive and profitable than ten dollars or more in the U.S. But the dirty little secret is that the attraction is more than wages; the attraction is freedom from taxes, burdensome legislation (federal, state and local), and burdensome government regulation. THE TRUTH IS THAT WE HAVE LEGISLATED and REGULATED OURSELVES INTO BANKRUPTCY. We’ve got to reverse these destructive actions.

We need to SERIOUSLY foster, encourage and support the development and growth of small business – over everything else. Today’s big businesses started as small businesses. Hometown Coca-Cola started as a headache remedy sold only in Jacob’s Drugstore in Atlanta. If John Pemberton (the creator of Coke) started today it’s highly unlikely that Coke would succeed. Legislation and regulation and government bias against small business would probably stop him in his tracks. We (the people – that’s you and me) have got to rid the government of their bias and destructive practices that discourage small business. After all, many of the jobs we need to create will come from small business.

Final thought – What now for the economy? – What now for you and me? We (you and me) need to come to the understanding and realization that it’s up to us to change. The government is not capable. The gurus on Wall St. do not have our best interest in mind. Therefore it comes down to the fact that if we’re going to survive and grow then we (you and me) are going to have to come together, take control and force the changes that are need to restore our economy. And we can do this by voicing our opinions and desires. Sending the message to the government. Sending the message to Wall St. (e.g., get out of the market) and voting out the politicians that are not on board with turning around the economy and creating jobs.

Our Man in Powder Springs

JYD

November 1st, 2009
1:02 pm

Why not suspend income taxes on people who are working for the next 3 months. We could apply the rest of the stimulas money to fund this. By giving people extra money in their checks every week, the stimulas money would enter the economy much faster than it has.
The Liberals don’t like ideas like this becuase they feel they need to direct the money towards their pet projects. They want to barn storm into town and tell the voters how they are spending their tax money for ther benefit.
et people get the money in their hands and let them dictate what they want to spend their money on.