Recession Unofficially Over

Analysis…

The Commerce Department released a report Thursday that stated the nation’s gross domestic product expanded at an annual rate of 3.5 percent in the last three months.  Many are attributing government programs such as Cash for Clunkers for the recent economic growth; yet employers are still reluctant to hire new employees, and steady unemployment rates are leaving critics room to question how long the recovery will last.

Huffington Post |  The long awaited report is out:
“Real personal consumption expenditures increased 3.4 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. Durable goods increased 22.3 percent, in contrast to a decrease of 5.6 percent. The third-quarter increase largely reflected motor vehicle purchases under the Consumer Assistance to Recycle and Save Act of 2009 (popularly called, “Cash for Clunkers” Program). Nondurable goods increased 2.0 percent in the third quarter, in contrast to a decrease of 1.9 percent in the second. Services increased 1.2 percent, compared with an increase of 0.2 percent”

Yes the cash for clunkers program was a big goose. But notice it wasn’t just durable goods that saw increases: non-durable goods and services also increased. And not by small amounts. Also note the durable goods purchases by consumers only comprise 12% of PCEs. Services are by far the biggest component of PCEs, coming in at 65.7%. And non-durable goods comprise 21.9% of purchases. That makes the 1.2% increase in services and 2% increase in non-durables very important. The increase was broad-based.
Short version: this is a very good report.

Matthew Yglesias |  Growth is back: “Gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, a significant spike from a relatively shrunken base. The economy had contracted at annual rates of 0.7 percent and 6.4 percent in the first and second quarters of this year, respectively.”
3.5 percent is solid growth. But given the prolonged period of increasing unemployment, the growth of the population during that period, the ongoing growth of the population, and increases in productivity, you’d have to sustain growth at that level for quite a few quarters before the labor market returns to good health. Another way of looking at it is that given the high unemployment rate and the recent contraction in output we should be able to sustain a period of abnormally high “catch-up” growth without sparking any inflation at all.
The key question going forward is will policymakers continue with growth policies until unemployment falls and wages are growing, or will they give in to demands from coupon-clippers and goldbugs to put the breaks on?

Politics Daily |  The economic growth came without a rise in inflation. It also arrived without major improvements in the job market, suggesting that it will still be months until the growth begins to stimulate new hiring.

The Daily Dish |  Only six months ago, we were afraid the entire global economy would be in a continued death spiral by now. It isn’t. One reason is that the Bush and Obama administrations pushed through emergency – and expensive – programs to prevent a second Great Depression. They may not be enough; and the deleveraging of the Bush debt (public and private) may take a while. But this is a real and tangible gain, given the very real likelihood of total meltdown only a few months ago. It is not cheer-leading to note that. Much much more is needed to tell if this recovery is self-sustaining. But a 3.5 percent gain is better than a 6.4 loss.

Gawker |  We’re very happy for the economy and its excellent quarter. How did American human beings do last quarter? Let’s have a look:

• Personal income decreased .5%, or $15.5 billion.
• Personal income taxes withheld increased $4.8 billion.
• Total personal spending increased .7%, or $20.4 billion
• Personal savings dropped 33% from the previous quarter.
• The number of new jobless claims last week was virtually unchanged from the previous week.

To recap: Your income decreased by $15.5 billion while your spending increased by $20.4 billion and your taxes increased by $4.8 billion, resulting in a 33% drop in “savings,” which means the amount of money you have. And you still don’t have a job. This recovery is going to be awesome.

Commentary |  What is unlikely to rebound is employment, which is always a lagging indicator. Worse, as I explained here, the rebound in employment has been taking longer and longer after each recession, as the microprocessor revolution rolls on.

News…

What happens to your Facebook profile when you die?  |  Talking Points Memo

In an Oct. 26 blog post, Max Kelly, Facebook’s head of security, announced the company’s policy of “memorializing” profiles of users who have died, taking them out of the public search results, sealing them from any future log-in attempts and leaving the wall open for family and friends to pay their respects.
Facebook’s attempt to clearly state its policy is prudent, as other social-networking sites have struggled with the question of users’ deaths. MySpace in particular has had a difficult time with digital rubbernecking — during the site’s heyday, a handful of well-trafficked blogs specialized in matching MySpace profiles directly to obituaries and posting the pairings online for all to see. By sealing profiles to family and friends and removing profiles from search results, Facebook assuages users’ fears that they’ll be fodder for online voyeurs in the event of their untimely demise — hopefully putting the issue to rest.

What’s So Scary About Michael Pollan?  |  AlterNet

Agribusiness is trying to combat Pollan’s message of sustainable, healthy eating. Even if agribusiness could shut Michael Pollan up, the outspoken author of Omnivore’s Dilemma and a journalism professor at University of California, Berkeley, it still has the Los Angeles Times to contend with.
Last week, the Times blasted California Polytechnic State University in San Luis Obispo for downgrading a scheduled Pollan lecture because it received pressure from David E. Wood, a university donor who happens to be chairman of the Harris Ranch Beef Co.

What Constitutes Justice For Guantanamo Detainees?  |  NPR

President Obama’s pledge to close the U.S. prison camp at Guantanamo Bay, Cuba, by the end of his first year in office navigated one roadblock last week, when Congress agreed to allow the transfer of prisoners onto U.S. soil to face trial.
But the struggle over where to try the remaining 221 prisoners — and what to do with them if convicted — is by no means over.
While the Justice Department works to meet a Nov. 16 deadline to present a plan for prosecuting prisoners, the national debate continues over how to administer justice to non-American prisoners whose allegiances may — or may not — lie with a terrorist ideology.