That the world’s largest economy has grown 3.5% in the July-September quarter, as data released on Thursday shows, is no small thing. But such a quick rebound is perhaps only testament to the wartime skills of US authorities. Managing the peace will certainly be trickier.
Motor vehicle output added 1.66 percentage points to the last quarter’s output change, courtesy Barack Obama’s “cash for clunkers” scheme that spends $3 billion to get Americans to trade in an old car for a new one.
Consider also that the US Federal Reserve has given no indication of ceasing its monetary accommodation. With 5.8 million Americans still on unemployment aid, a central bank committed to full employment may extend these easy policies. And it will take time for a turnaround in output to help labour markets.
Factor in the little tidbit that the US has a printing press like none other at its disposal, and suddenly there’s the fearful image of a US leader claiming “Mission Accomplished” aboard an aircraft carrier.