The economy: Is the recovery for real?

“At long last, growth!” said Matthew Yeomans in Slate.com. The Great Recession is officially over. Last week, “there were cheers for the resilient U.S. economy” when the Commerce Department announced that the nation’s gross domestic product expanded by 3.5 percent in the last quarter. Not only was this the first quarterly expansion in more than 18 months, said Catherine Rampell in The New York Times, but the growth was more vigorous than expected. In fact, 3.5 percent matches the 80-year average for periods of economic expansion—suggesting that the Obama administration’s stimulus program is working, and that we might be returning to normal sooner than many predicted. To be sure, the economy is still shell-shocked from the financial industry’s near-collapse, and jobs and credit remain painfully tight. But “the United States has emerged from the longest economic contraction since World War II.”

Pardon me if I don’t break out the champagne, said Jim Stratton in the Orlando Sentinel. If this is a recovery, it’s one “only an economist could love.” It’s not just that “the stench of fear lingers over the labor market,” with unemployment on the verge of hitting 10 percent for the first time since the 1980s. The deeper problem is that because the growth was fueled by massive government spending, it’s unsustainable. Call it “the Gross Domestic Prop-up,” said Paul Tharp in the New York Post. Without all those goodies like the “cash for clunkers” program, expanded unemployment benefits, and tax credits for home buyers, the economy would still be shrinking. This recovery is an illusion.

You’re actually making the argument for more federal spending, said Paul Krugman in The New York Times. Without the recovery package, “the free-fall would probably have continued, as unemployed workers slashed their spending and cash-strapped state and local governments engaged in mass layoffs.” The brutal recession we just escaped could have easily turned into a prolonged depression. But the nation’s economic fundamentals remain weak, so growth will continue only if the federal government launches a second wave of stimulus spending. Unfortunately, “the political prospects for further action aren’t good.”

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You mean sanity may prevail in Congress? asked The Wall Street Journal in an editorial. It’s highly debatable whether government spending played much of a role “saving or creating” 650,000 jobs, as the White House claims. But throwing $789 billion of taxpayer money at the economy “did bust the federal balance sheet,” and this year’s staggering $1.4 trillion deficit forms a “dark cloud” over the economic outlook. Even if we take Obama’s job claims “at face value,” said The Washington Examiner, they’re underwhelming. With $150 billion of stimulus funds spent so far, the math says we’ve spent $230,000 per job. Any way you slice it, “taxpayers aren’t getting any bargains here.”

Argue about the numbers if you like, said the Chicago Tribune, but let’s not forget where we were just a year ago. “Financial institutions were imploding, credit was frozen solid, the stock market was plummeting,” and a full-blown depression loomed. Today, exports are rising, consumers are spending again, and inflation and interest rates remain “helpfully low.” If the sun still isn’t shining on Americans who’ve lost their jobs, “the first rays of dawn can be seen peeking above the horizon.”