We have experienced the worst economic recession since the 1930s, in the recent past. But believe it or not, this period (3rd quarter, 2009), has been the best in around 2 years. The US economy has grown at around 3.5%. The Commerce Department's report released yesterday indicated that, though these are early days and things are not 100% clear, the recession has indeed ended.Before this quarter, there were 4 consecutive quarters of diminishing economic activity, which was experienced for the first time since 1947. But this quarter's performance has been good, and it's the first time, that we have something to cheer about since the depression hit us, in the last month of 2007. It is fair to say that this growth has not been totally unexpected since the growth projection was around 3.3%, but yes, the even better growth of 3.5%, is definitely welcome.
The government programs are largely to be thanked for this turnaround, especially the push given to the housing and automobile sectors. One such program was the 'Cash for Clunkers' program, in which a rebate of around $4,500, was offered on purchase of new cars. Trade-in of old cars, too was promoted in a large way. As a result of all the government initiatives, big spending rose by more than 22% annually, this quarter, the best showing since 2001.
The housing sector also managed to do very well. Annual growth is over 23%, an unbelievable rate, that was last seen only in the 1980s. It is also the first time since way back in 2005 that spending on housing showed a positive sign.
While things seem to be good, going ahead, it maybe wise to be cautious and keep our fingers crossed.
