Economic recovery is still a long way!
en-USSo it’s official now that the economy is yet to recover. As many economists were speculating that the unemployment rate will be around 9.9 percent for October 2009, the Bureau of Labor Statistics(BLS) today confirmed that it was a double-digit 10.2 percent, the highest since April 1983. Earlier this week, the market was beaming with the news that the economy has grown at an annual rate of 3.5 percent in the third quarter after declining for past several months. The rosy picture was also painted by the Institute for Supply Management reports, claiming that economic activity expanded for both manufacturing and also non-manufacturing sectors in October.
So now we have a positive GDP growth and high unemployment. The GDP growth was probably fueled by “cash for clunkers” and better trade situation. Since retail sales (excluding motor vehicles and parts dealers) was around $250 billion in September, the picture changes if we consider sales for motor vehicles and parts dealers, which spiked in July. So, this GDP growth is probably a one-time phenomenon and not going to prevail. In order to have a sustain growth, consumer spending should rise. With the holiday season round the corner, but with so high unemployment situation, the sales is not going to get a boost in this season. Rise in consumer sentiments and more job creations are important right now. It seems that it will be a while before we see any of these improving.
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