Bad News and More Bad News

The government announced that the GDP figures for the third quarter have been revised downward again. (See WSJ article on it here.) The original estimate that was released in mid-October was 3.5% annual growth rate. It was revised down to 2.8% in November and now revised again to 2.2%. That is a substantial change in the figures. One thing it shows is that we should be cautious in our declarations about the strength or lack of strength of the recovery based on preliminary figures. A country hungry for good news in October jumped on the robust estimate. It is still positive growth, but more in line with the concern felt by many that unemployment will take a long time to return to levels we observed earlier in the decade.

Yesterday's Wall Street Journal reported that the decade of the '00s has seen the worst performance by the U.S. stock market for any decade, even worse than the '30s.

Hopefully, there is no where to go but up.

Is the Recession Over?

The Bureau of Economic Analysis issued a statement today reporting that GDP increased in the third quarter. Normally, that would mean the recession is over. Obviously, the pain is not over yet, and we are no where near a level of output that we had before the recession began. Another concern is that the third quarter may be something of an anomoly because auto sales surged with the "cash for clunkers" program. Real personal consumption expenditures rose 3.4 percent while durable goods increases 22.3 percent.

The figures are preliminary and may be adjusted when more data become available in late November.