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Stimulated, But Worried (With Good Reason)
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By fgrace on October 30th, 2009
There was both joy and skepticism on Wall Street, as third quarter GDP figures showed growth in the U.S. economy for the first time in over a year, a 3.5 percent annual rate expansion fanned by government stimulus spending seen as suggesting an end to the recession.
One group not seen stocking up on party hats is the economists. "The economy has emerged with gusto from the deepest recession since World War II," Unicredit Markets economist Harm Bandholz told Reuters. "The short-term prospects for the economy remain good."
"Short-term" is, indeed, the watchword, and Reuters underscores it with the words of economist Chris Low: "The economy is entirely dependent on federal deficit spending at the moment… Once the government steps aside, growth is likely to fall back to a one to two percent rate of growth."
So the long-term problem of the federal budget deficit and escalating national debt remains, and will have to be dealt with before the long-term is allowed to play out. That's a message you've heard here before – but here are a few new tidbits to help you wrap your mind around the issue and get involved in making the spending choices that are determining our present and shaping our future:
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»A new report finds the main problem in getting the public to deal with our fiscal problems isn't opposition to tax increases or spending cuts -- it's their lack of trust in the government to spend their money wisely.