WASHINGTON - The recession faded in the spring with economic activity shrinking at a pace of just 0.7 percent, a better-than-expected showing that buttressed beliefs the economy is growing now.
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A main reason for the second-quarter upgrade: businesses didn't cut back spending on equipment and software nearly as deeply as the government had thought. Consumers also didn't trim their spending as much.
Many analysts predict the economy started growing again in the July-September quarter, due partly to President Barack Obama's $787 billion stimulus package and the government's now defunct Cash for Clunkers program, which had ginned up auto sales. It offered people rebates of up to $4,500 to buy new cars and trade in less efficient gas guzzlers.
Earlier this month, Federal Reserve Chairman Ben Bernanke said the recession, which started in December 2007, is "very likely over."
This recession has been bad, there's no getting around that. Years of deregulation and a massive housing market bubble led to a situation where a few very bad actors were able to extract billions in real wealth from the system and cause huge losses for everyone when the house of paper-wealth cards came tumbling down.
But imagine how much worse it would have been without these stimulus measures. Imagine how much longer it would be taking us to get out of this worldwide dive if we weren't saving however many thousands of jobs through direct stimulus spending.
Yeesh. Frightening thought.
