Update:Marc Faber, Dr Doom, agrees with MiM; Christina Romer on stimulus bump in GDP; 3Q GDP in up 3.5%;Market Mover Thursday: 3Q GDP 8:30am EST..

UPDATE: Well! The original Dr Doom Marc Faber himself agrees with MiM’s analysis of the GDP and even uses the drunk analogy we used! Go read the whole thing!:

(…)Faber pointed out that there is currently a tug-of-war between the government and corporations and consumers. The government is pushing corporations and consumers to increase leverage, while they try to reduce borrowing in the wake of the financial crisis, he said.”If you have a drunk and he is drunk, you try to solve his problem by giving him more … this is role of the government. In my opinion this worked very badly,” he said…

…Bernanke only ever targets core inflation, Faber pointed out. But that strategy misses the point and it was the main cause of the current crisis, he said.

“How many people in this room can live without food and energy?” he asked a packed conference hall at the World Money Show. “Maybe at the Federal Reserve,” he added….

Reminder of the stimulus impact on this number and its return to zero in 2010 courtesy of Calculated Risk by way of Team TOTUS itself:

From Christina Romer, Chair, Council of Economic Advisers in Testimony before the Joint Economic Committee: From Recession to Recovery

In a report issued on September 10, the Council of Economic Advisers (CEA) provided estimates of the impact of the ARRA on GDP and employment. …

These estimates suggest that the ARRA added two to three percentage points to real GDP growth in the second quarter and three to four percentage points to growth in the third quarter. This implies that much of the moderation of the decline in GDP growth in the second quarter and the anticipated rise in the third quarter is directly attributable to the ARRA.

Fiscal stimulus has its greatest impact on growth around the quarters when it is increasing most strongly. When spending and tax cuts reach their maximum and level off, the contribution to growth returns to roughly zero. This does not mean that stimulus is no longer having an effect. Rather, it means that the effect is to keep GDP above the level it would be at in the absence of stimulus, not to raise growth further. Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009. By mid-2010, fiscal stimulus will likely be contributing little to growth.
emphasis added

The impact on GDP will be smaller going forward, and according to Dr. Romer, the impact will be around zero by mid next year, and will be a drag later in 2010 (as stimulus is reduced).

Update: El Rushbo on shenanigans with the stimulus job numbers:

Courtesy of therightscoop

Update: Diane Swonk on CNBC notes 1.7% of this GDP came from Clunkers. Rick Santelli agrees with MiM, it is a number driven by inventory builds and clunkers, it is less than 2% in reality and it is unsustainable without govt spending…GDP is important in part because it traditionally means you know JOBS. this is NOT a job creating GDP recovery number, this is a head fake, 4Q will have the homebuyer tax credit bump too, 1Q 10 2Q 10 are the real ones to watch and ONLY if the govt STOPS the Keynesian spending which IS NOT WORKING, THERE ARE STILL NO JOBS!

Ride Zombie Bull Market Ride!

Update: Data in: 3Q GDP up 3.5% (clunkers, home credits, inventory builds,) MiM is still predicting a double dip, we are right on schedule…UE claims higher than expected…I predict a slew of speeches from Team TOTUS patting themselves on the back for what is IMO a fake number driven by government intervention with ridiculous spending programs like clunkers and homebuyer credits. When they are producing  jobs and actual sustained durable good orders and retail sales THEN I will call it a recovery.

But we will be forced to listen to TOTUS patting himself on the back for a while first, ugh. And when it collapses AGAIN (I predict the double dip in  1Q or 2Q 2010 depending when the WH runs out of spending programs as the bond vigilantes force rates higher and the Fed either wakes up and tightens or lets hyperinflation kill the consumer) will TOTUS then re-blame GWB?

-FOX is reporting taxpayers spent 24,000 per frakkin clunker, unreal (Edmunds.com). FOX notes the Govt waits one hour after GDP release to talk about it so enjoy your TV while you can, lol.

CNBC:

The U.S. economy grew in the third quarter for the first time in a year as consumer spending and investment in new home-building rebounded, data showed on Thursday, unofficially ending the worst recession in 70 years..

..Initial claims for state unemployment insurance declined, though the number was higher than expected, to a seasonally adjusted 530,000 in the week ended Oct. 24, the Labor Department said. Analysts polled by Reuters had forecast claims to fall to 521,000 last week from 531,000.

The Commerce Department, in its first estimate of third-quarter gross domestic product, said the economy grew at a 3.5 percent annual rate, the fastest pace since the third quarter of 2007, after contracting 0.7 percent in the April-June period.

The growth pace in GDP, which measures total goods and services output within U.S. borders, was above market expectations for a 3.3 percent rate. The economy last grew in the second quarter of 2008…

(more…)

October 28, 2009. Tags: 3Q GDP, cash for clunkers GDP, Consumer Spending, Dr Doom, Economy, Homebuyer tax credit GDP, Marc Faber, recession, Rush Limbaugh, rush on stimulus jobs. Economy, Finance, Housing, Obama Administration, Politics, Wall St. Comments off.