Manchy
12-23-2009, 04:40 AM
Without cash for clunkers, cash incentives to purchase houses, and other government stimulus, we most likely have had 3rd quarter negative growth. When stimulating car sales by cash giveaways is 70% of GDP, you know the economy is in seriously bad condition.
http://www.businessinsider.com/70-of-the-gdp-growth-was-cash-for-clunkers-2009-12
Today's downward revision is far worse than it first appears. While third quarter GDP was revised down by a 0.6% (2.2% vs. 2.8% previously), the contribution from motor vehicle output (which was massively stimulated by Cash for Clunkers in a one-off fashion) remains enormous.
BEA GDP Release: Motor vehicle output added 1.45 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change.
What this means is that Cash for Clunkers was an even larger factor than previously understood. As it stands, by a basic calculation without motor vehicle output, third quarter GDP would have been only 0.75%. That's barely growing.
Now obviously there might have been some degree of GDP contribution from motor vehicle output even if Cash for Clunkers hadn't happened. Yet it would have been far less than 1.45%, look at Q2's contribution noted above, it was only 0.2%.
Also, the contribution could have actually been negative (subtracting from GDP growth) if motor vehicle output had contracted without stimulus. (Which isn't a wild scenario given the state of things for U.S. autos). And actually, in Q3 of 2008, the same year-ago period, motor vehicle output subtracted 0.15% from GDP growth according to the BEA. This means we could even be underestimating the boost from Cash for Clunkers here.
http://static.businessinsider.com/~~/f?id=4b30dbd40000000000f7e271&maxX=550
http://www.businessinsider.com/70-of-the-gdp-growth-was-cash-for-clunkers-2009-12
Today's downward revision is far worse than it first appears. While third quarter GDP was revised down by a 0.6% (2.2% vs. 2.8% previously), the contribution from motor vehicle output (which was massively stimulated by Cash for Clunkers in a one-off fashion) remains enormous.
BEA GDP Release: Motor vehicle output added 1.45 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change.
What this means is that Cash for Clunkers was an even larger factor than previously understood. As it stands, by a basic calculation without motor vehicle output, third quarter GDP would have been only 0.75%. That's barely growing.
Now obviously there might have been some degree of GDP contribution from motor vehicle output even if Cash for Clunkers hadn't happened. Yet it would have been far less than 1.45%, look at Q2's contribution noted above, it was only 0.2%.
Also, the contribution could have actually been negative (subtracting from GDP growth) if motor vehicle output had contracted without stimulus. (Which isn't a wild scenario given the state of things for U.S. autos). And actually, in Q3 of 2008, the same year-ago period, motor vehicle output subtracted 0.15% from GDP growth according to the BEA. This means we could even be underestimating the boost from Cash for Clunkers here.
http://static.businessinsider.com/~~/f?id=4b30dbd40000000000f7e271&maxX=550