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Growth in Economy is Artificially driven

The GDP expanded 3.5% in third quarter. This does show that this recession is coming to an end. But fine lines of this result shows that this growth is artificial.

The main component of GDP grwoth was consumer spending, which contributed 2.36 % point to GDP growth. But the point to keep in mind is that the consumer spending rose because of the massive stimulus injected by government, which reached its maximum effect in third quarter with programs like cash to clunkers.

Sales of new house fell by 3.6% in September. The reason being the decrease in effect of federal tax credit for first-time home buyers.

These all mixed data results show that, the economic recovery has been supported by the government stimulus. It is yet to see how the economy will sustain itself as the stimulus is withdrawn.