GDP for the third quarter was released.  Real gross domestic product was up 3.5% at an annualized rate.  Let’s compare that to the first quarter when it was falling at a 6.4% annualized rate.  So in other words, from the trough to where we are today, we have a 9.9% swing in economic activity.  That is a V-shaped recovery. 

That’s economist Brian Wesbury in his recent Wesbury 101 video on why we appear to be in the midst of a V-shaped economic recovery.  Later he says why the government’s stimulus spending has hurt this process:

… every dollar the government spends it has to tax or borrow from someone else which means they can’t spend it.  I believe the more the government spends, the more they take from the private sector, the slower economic growth is.  In other words, what I’m saying is the economy would be even stronger today if it weren’t for the stimulus spending.  

And finally, he touches on the error being made by conservatives in Washington:

Today they’re on the defensive.  They’re trying to argue that GDP was not good, that it was only because of Cash for Clunkers and only because of the First Time Home Buyers Tax Credit that the economy is growing.  And once those go away, in fact the economy will slow down and we’ll find out that things aren’t really as good as they should be.  This is a strange place for conservatives to be in.  I think they’re making a big mistake in this argument because the economy is highly likely to stay strong for the next 12 to 18 months.

I can’t say there is much here to disagree with.

Related posts:

1. Turnaround Ahead
2. Eventually Stocks Will Begin Trading on Positive Fundamentals
3. Unemployment and the Stock Market
4. Reasons Consumer Spending Will Likely Grow in 2010
5. The Reverse Bubble

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