Slow But Steady – Is the Economy Getting Better?

Home Sales show the economy is getting better

There are indication that the economy is getting better. Home sales are just one of them. Photo by Forest2Market/Flickr

Is the economy getting better, or are we just adjusting to the drop? People around the country are living pay check to pay check. Don’t fret, there actually have been hopeful signs that the economy really is on the rebound. Manufacturing activity still is rising. Car sales are still happening, even years after the auto bailout.

Home sales and Employment are on the rise

Even though there seems to be increases and drops in home sales, overall the number of sales for the past year has increased. Also, while unemployment is still at unbelievable levels, the number of unemployed seems to be decreasing. That does leave one to wonder though, is unemployment really decreasing, or are more people giving up on finding jobs? Nonetheless many experts had predicted the unemployment rate to be lower than it is today, so where does that leave us?
Several factors may be at work in the discrepancy between the GDP and the unemployment rate. Last week, the government revised earlier data to show that the GDP has declined a cumulative 3.7% (rather than 2.5%) since the end of 2007, tying with 1957-58 as the deepest recession since the Great Depression.

The rise in production may be a false reading

Employers are not likely to do much hiring until it seems reasonably certain that the new growth in production will continue. And some economists are doubtful that what we are seeing is real growth. These experts attribute the recent increase in production to the replenishment of inventory after an extended period of filling new orders from existing inventory in idle factories. They point out that inventory replenishment gives production a temporary boost without a corresponding increase in consumer demand.
The federal cash-for-clunkers program may also have given production an artificial boost. Recent car sales have been strong, in large part because of the program, which offers subsidies of as much as $4,500 to people trading in older, higher-emissions vehicles for newer, more fuel-efficient cars. But the $1 billion set aside for the program, which was supposed to run for several months, was depleted within the first week. The House of Representatives has now voted to spend an additional $2 billion and the Senate is expected to do likewise. But cars bought now will mean fewer cars bought later.

Numbers have a way of changing whether the economy is getting better

And one more qualification: Government figures are notoriously subject to revision. Even the Great Depression is getting worse. According to the latest revisions, the GDP fell 26.7% (rather than 26.6%) between 1929 and 1933. In another 50 or 60 years, or as soon as next week – who can say? — today’s fresh new growth in production may never have happened. What is your opinion on our economy today? Where are you today as opposed to ten years ago, better off or not?

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