{"id":93976,"date":"2009-12-22T10:05:00","date_gmt":"2009-12-22T15:05:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/70-of-the-gdp-growth-was-cash-for-clunkers-2009-12"},"modified":"2009-12-22T10:05:00","modified_gmt":"2009-12-22T15:05:00","slug":"70-of-the-q3-gdp-growth-was-cash-for-clunkers","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/93976","title":{"rendered":"70% Of The Q3 GDP Growth Was Cash For Clunkers"},"content":{"rendered":"<div style=\"float: left; padding: 15px 15px 15px 0;\">\n<script type=\"text\/javascript\">\/\/ <![CDATA[\ntweetmeme_source = 'moneygame'; tweetmeme_service = 'bit.ly';\n\/\/ ]]><\/script><br \/>\n<script src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\" type=\"text\/javascript\"><\/script>\n<\/div>\n<p>Today&#8217;s downward revision is far worse than it first appears. While third quarter GDP was revised down by a 0.6% (2.2% vs. 2.8% previously), the contribution from motor vehicle output (which was massively stimulated by Cash for Clunkers in a one-off fashion) remains enormous.<\/p>\n<p style=\"padding-left: 30px;\"><a href=\"http:\/\/www.bea.gov\/national\/index.htm#gdp\">BEA GDP Release:<\/a> Motor vehicle output added 1.45 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change.<\/p>\n<p>What this means is that Cash for Clunkers was an even larger factor than previously understood. As it stands, by a basic calculation without motor vehicle output, third quarter GDP would have been only 0.75%. That&#8217;s barely growing.<\/p>\n<p><img decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/~~\/f?id=4b30dbd40000000000f7e271&amp;maxX=550\" border=\"0\" alt=\"gdp\" width=\"550\" \/><\/p>\n<p>Now obviously there might have been some degree of GDP contribution from motor vehicle output even if Cash for Clunkers hadn&#8217;t happened. Yet it would have been far less than 1.45%, look at Q2&#8217;s contribution noted above, it was only 0.2%.<\/p>\n<p>Also, the contribution could have actually been negative (subtracting from GDP growth) if motor vehicle output had contracted without stimulus. (Which isn&#8217;t a wild scenario given the state of things for U.S. autos). And actually, in Q3 of 2008, the same year-ago period, motor vehicle output <em>subtracted 0.15%<\/em> from GDP growth according to the BEA. This means we could even be underestimating the boost from Cash for Clunkers here.<\/p>\n<p>Thus no matter how you slice it precisely, a huge part of Q3 GDP came from inflated motor vehicle output, and a simple estimate is that GDP growth would have been only 0.75% sans Clunkers.<\/p>\n<p><strong>Thus third quarter GDP growth was mostly Cash for Clunkers.<\/strong><\/p>\n<p>Which means that from a political stand point, the administration must be pretty happy with the program. Economic data would be <em>looking<\/em> a lot worse without it.<\/p>\n<p>Problem is, Cash for Clunkers was a one-off effect, and arguably economically-damaging in the long-term. Going forward, there&#8217;s risk that U.S. GDP could be weaker than economists expect if their forecasts are running off of Q3&#8217;s inflated 2.2% GDP statistic (Or worse, the previous 2.8% Q3 estimate).<\/p>\n<p><a href=\"http:\/\/www.bea.gov\/national\/index.htm#gdp\">Want to check our numbers? It&#8217;s all from the BEA data here.<\/a><\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/70-of-the-gdp-growth-was-cash-for-clunkers-2009-12#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/gdp-revised-way-lower-much-slower-than-expectations-2009-12\">Q3 GDP Revised All The Way Down To 2.2%, Much Lower Than Expectations<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/goldman-prepare-for-the-de-stimulus-when-fiscal-restraint-turns-into-a-gdp-drag-2009-12\">Goldman: Prepare For The De-Stimulus, When Fiscal Restraint Turns Into A GDP Drag<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/deustche-best-buy-sales-growth-forecasts-the-economy-2009-12\">Best Buy Is So Huge, Their Data Predicts The GDP<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/ZvCwAhXRsOE\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Today&#8217;s downward revision is far worse than it first appears. While third quarter GDP was revised down by a 0.6% (2.2% vs. 2.8% previously), the contribution from motor vehicle output (which was massively stimulated by Cash for Clunkers in a one-off fashion) remains enormous. BEA GDP Release: Motor vehicle output added 1.45 percentage points to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-93976","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/93976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=93976"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/93976\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=93976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=93976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=93976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}