Is the Recession Over?

This week’s poll results examine what respondents are thinking about the economy. The poll was not scientific and was driven by radio listeners of the syndicated Don Creech Radio Show and subscribers to its “Week in Review” email. Listen or subscribe at www.DonCreech.com.

Is the recession over?

Seventy percent of respondents believe the recession has ended. Officially it will require two quarters of positive GDP for the recession to be declared history. The government cannot post third quarter results until next month. Currently, we have been through four consecutive quarters of negative economic activity. The second quarter of this year was only a -1.0%, a big improvement from the prior quarter of -6.4%. Until we complete the first quarter of 2010, we will not know if this recession is ready for the history books.

Presumably, the wealth redistribution programs of Cash for Clunkers and First Time Home Buyer Tax Credit will have added sufficient activity to push the economy into a positive growth status. However, the unresolved issue is the sustainability of sales when the wealth redistribution programs have ended.

Auto dealers are holding the lowest on-lot inventory since 1992 according to CBS News. Artificially stimulated sales activity allowed dealers to increase their profit margin due to the increase in demand. In the short run, dealers can rejoice in their good fortune. In the long run, we tax payers have to thank principally China and Japan for loaning the money to make this happen. No one seems to know what or when the consequences will be when we tax payers have to pay back the money for the stimulus we received.

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