A light went on in my head the other day regarding a few reports that came out over the last two months.
One report form the CBO cheerleads the American Recovery and Re-Investment Act (ARRA) for its impact on the economy. Another report from the National Bureau of Economic Research tells us that the Recession ended in June 2009. And, finally, the Bureau of Economic Analysis tells us what the Real GDP was in the 2nd Quarter of 2010.
We read, according to the NBER, that the Recession ended in June 2009. Then, we read from the BEA that the Real GDP in the 2nd Quarter of 2010 was 1.7% — growth, but very slow growth. Then comes the CBO to let us know how that the ARRA affected Real GDP from 2009 – 2010.
Well, according to CBO, in 2nd Quarter 2010, the Real GDP is increased/affected as a result of the ARRA by a minimum of 1.7% to a maximum of 4.5%. I’m sure at some point the Obama Administration touted the higher numbers from CBO as the evidence of the success of the ARRA. And, since the funds for the ARRA were borrowed (stolen) from our children (from our children’s GDP), to look at the REAL figures, we need to back the ARRA affect on the GDP out of the pictures.
So, when we subtract the 2nd Quarter 4.5% (ARRA) from the 1.7% (GDP), we get a Real GDP reduction of -2.8%. If we look back to 1st Quarter 2010, we need to subtract 4.1% (ARRA) from the 3.7% for a Real GDP reduction of -0.4%.
And, there you have it. Two quarters of negative GDP growth equals Recession equals Double-Dip.
Not only did the ARRA NOT pull us out of recession, it masked the 2nd portion of the Double-Dip by stealing our children’s GDP.