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Thursday, August 28, 2008

Economic Growth or Temporary Spike

The major weblink today from msnbc is:
"Economic Growth Stronger than Expected."

All this because revised GDP growth for the second quarter 2008 is 3.3%, up sharply from the original estimate and past quarter.

The problem of course is that is when everyone started getting and spending their stimulus checks. So, it's demand-led growth certainly, but it's temporary and many economists are predicting the spike to subside in coming quarters. I don't think such a misleading idea is warranted here. It's kinda like telling people the hurricane has passed but ignoring the fact that the levees you built are about to give way to a flood.

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