Headlines across the nation today are reading, or will read, "Recession’s Over: GDP Rises 3.5%." Many "expert" economists have been declaring the recession over since July. I, along with many others, am still waiting to see some solid signs the recovery has actually began. It does seem good and many of us want to believe it’s true but with all of the "fake" money in the system how can they actually get an accurate assessment. It’s impossible.
Let’s take a look at what has actually boosted the "growth" we are seeing in the economy. First, and probably foremost, the homebuyer tax credit has raised home sales at a pretty rapid pace. This tax credit, however, is costing the government and in turn us $8,000 per first time home buyer that actually just bought a house because of the credit. We’re paying for this, the people who bought those houses are paying for this in the form of a tax contribution to the government. How does this produce anything other than more bills for U.S. citizens? It doesn’t. Second, but no less important, the "cash for clunkers" program. Another economy saver that has really ended up costing us more money. Once again we as taxpayers are covering the bill for all those rebates that brought the economy "out of" the recession.
If the consumer is the most important aspect in growing the economy than adding more bills for us is not the way to save us. Consumer’s, in theory at least, can’t spend more on goods when they are already spending more to cover these programs. "Cash for clunker’s" was meant to aid our ailing automakers. When a majority of the car’s bought under clunker’s were foreign produced it is not a success it would be a failure. A failure to shore up rising debts for these American companies. A failure to shore up the economy with real statistics. A failure in all aspects of the program.
The housing market hadn’t grown in many months but over the past few it has grown pretty rapidly. Why though? Not that many people were going to buy a house until they found out they got eight thousand dollars back for buying it. You may be asking how is that not good? First as I said before that eight thousand is coming from you, me, and the purchaser of the home. They’re not really getting anything back and once this program has ended house sales will slump again. Jobs aren’t coming back, hours are still getting shorter, and people can’t afford these things. How many of these new homeowners will be in foreclosure within two years? How many of these people rushed into something they probably wouldn’t have for another few years? They did it only for the eight thousand dollar tax credit. This program could be the cause of another future housing market catastrophe.
In short, the economy may show growth but this growth seems to be exaggerated by all of the government bailouts. Bailouts that may not have been needed if it weren’t for the ones who rushed to buy houses in the boom when it wasn’t feasible. Which may have happened again during the bust due to the governments manipulative, "save the economy", programs. As long as they show growth, fake or not, it makes them look better and that’s what this is all about.