The economy only grew 2.8% in the third quarter this year, down from the 3.5% estimate in the Q3 GDP report released a month ago. More data came in over the last month, which showed that commercial real estate and personal spending wasn't as strong as initially estimated.
For a history of all GDP reports since 2007, see GDP Current Statistics. (Source: GDP News Release)
This is still the first time GDP has been positive since the recession started in 2007. Recessions are usually defined by negative GDP growth. The BEA report means the recession is technically over.
However, GDP would have only been .7% without the Economic Stimulus Program and the Cash for Clunkers incentive. Federal government spending contributed .65% to GDP growth, while motor vehicle sales contributed 1.45%. With a Federal debt level hovering now above $12 trillion, government spending can't drive the economy much longer.
What It Means to You
There are many economic trends that could delay a full recovery. The commercial real estate time bomb is still ticking and a "shadow inventory" of foreclosures is hanging over a housing recovery. Businesses are still not confident, which means unemployment will continue to rise. This will hamper consumer spending, which drives 70% of economic growth. Most important, normal bank lending needs to return for a full recovery.
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(Photo Credit:Bill Pugliano/Getty Images)
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