Goldman Sachs, Morgan Stanley and the like were throwing around their GDP estimates yesterday afternoon. While the market consensus was 3.2%, the numbers were really all over the board. At one point, Goldman actually revised their estimate down to 2.7%; however, it looks like everyone was off:
The U.S. economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. It’s the strongest signal yet that the economy has entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended.
I feel the most important part of the story is burried toward the end:
A top concern is whether the recovery can continue after government supports are gone. Many economists predict economic activity won’t grow as much in the months ahead as the bracing impact of Obama’s $787 billion package of increased government spending and tax cuts fades.
This makes me ask how much of the GDP number was propped up because of Cash for Clunkers and the 1st time home buyers tax credit.