Another positive is the fact that consumer spending rose 1.7% annual rate for the fourth quater.  The spike in spending contribited 1.2 percent to the total GDP.

The gross domestic product expanded at an annual rate of 5.7 percent increase the fourth quarter.  This is great news, but experts are a little skeptical on the economies’ long term pace of growth.  The growth rate in this quarter was the fastest growth since the third quarter of 2003. 

The Obama administration seized on news of the latest upturn as an opportunity to push its proposal to encourage hiring.  Companies would receive a tax credit of up to $5,000 for each new hire, and an additional credit on Social Security payroll taxes for raising wages — by increasing hourly pay or work hours, for example — in excess of inflation.  “Now’s the perfect time for this kind of incentive because the economy is growing, but businesses are still hesitant to start hiring again,” President Obama said in Baltimore.  

Up to this point, the economy has still been able to grow despite substantial job cutbacks across the nation.  Productivity of employees has increased 8.1% in the third quarter of 2009. It was also evident that businesses are spending more on technology in order to increase employee productivity. 

 • Change in tax revenue
N.C., -7.6%; California, -16.2%;

• Size of budget gap
N.C., 21.9%; California, 49.3%;

• Change in jobless rate
N.C., up 5 percentage points; California, up 4.6:

• Foreclosure rate
N.C., 0.65% California, 2.02%;

• Fiscal management grade
N.C., B-; California, D+

Other states with high misery scores were Arizona and Rhode Island, both scoring a 28, Michigan , 27; and Florida, 25.

States’ revenue data was from Q1 2008 to Q1 2009; budget gap data, is for fiscal 2010 through July; unemployment, Q2 2008 to Q2, 2009; and foreclosure data, Q1, 2009

Jim Gillespie, CEO of Coldwell Banker LLC, played a key role in the extension of this bill.  Gillespie and many other leaders in the real estate industry have been activists for this cause.  They have fought for almost a year now to have the bill extended, and in a email he sent out to Coldwell Banker associates he states,

“This is an historic moment for our industry as well as the culmination of more than a year’s worth of hard work and meetings with elected officials and policy makers. I want to personally thank all of you who participated in Coldwell Banker’s Legislative Week, which was the springboard for my meetings on Capitol Hill, as well as the numerous other legislative calls for action — I am both proud and appreciative of how so many of you made office visits, phone calls and e-mailed your elected officials. Combined with Realogy’s instrumental efforts on Capitol Hill, I know that our grass roots outreach to Congress and the Administration truly helped make a difference on this issue.”

The Senate was also commended by the National Association of Realtors for the extension.  NAR estimates that the current tax credit aided about $22 billion in home sales.

Bill Details:

·         Extends the present $8,000 tax credit for first-time home buyers through April 30, 2010.  

·         Current homeowners are eligible for a $6,500 tax credit through April 30, provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years.

·         If potential home buyers have a binding contract on or before that date, they will have until July 1 to close the transaction.  

·         Income limits for eligible home buyers are expanded to $125,000 for single buyers and $225,000 for couples.

·         The purchase price of the home cannot exceed $800,000. 

·         To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.

Fortunately there has been some 

This is the best improvement in our economy in two years.  Much of this economic growth was fueled by the government supported spending on cars and homes. 

This welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered,” said Christina Romer, President Barack Obama’s chief economist. “It will take sustained, robust … growth to bring the unemployment rate down substantially. Such a decline in unemployment is, of course, what we are all working to achieve.”

Consumer spending is rising as Americans are becoming more and more confident.  Consumer spending on big manufactured goods soared 22.3%  in the third quarter, which is the most since 2001.

The number of existing home transactions increased in August more than expected. 

The index of contracts for existing home sales rose 6.4% after a 3.2% gain for the month of July, as reported by the National Association of realtors.  This is the seventh month in a row that this index has risen. 

Many experts believe that these sales are being stimulated by factors such as: declining home prices, low mortgage rates and government stimulus programs.  These factors are helping alleviate the housing market downfall that we have been experiencing. 

Federal Reserve policy makers announced last week that they are committed to buy $1.25 trillion mortgage back securities.  “We are in a recovery,” said Gary Thayer, macro strategist at Wells Fargo Advisors LLC in St. Louis, before today’s report. “There were a lot of people who were on the fence. Prices are firming up and people are getting back into the market.”

Building permits have also seen an increase of 2.7% and economists are predicting this number to grow more before it decreases again.

  The current recession that has tormented the U.S. and the world since December 2007 is “very likely over at this point,” Federal Reserve Chairman Ben Bernanke recently said.

During questioning however, Bernanke stated that we can expect an sluggish economy well into 2010.  “From a technical perspective the recession is very likely over,” Bernanke said, cautioning that unemployment is likely to remain high.  “It’s still going to feel like a very weak economy for some time, as many people will still find that their job security and employment status is not what they wish it was.”  

Bernanke points out that there are still “head winds” that will slow growth, like an impaired credit system, households still trying to dig out from personal debt and ongoing adjustments in many sectors of the economy, such as construction and autos. The government will also have to refine a great deal of its stimulus plan to avoid inflation. Higher inflation will lead to a slower recovery and increased unemployment. 

When looking at the long-term, Bernanke said that a critical part in the global expansion of credit is unlikely to recover anytime soon due to damage that was caused. “My forecast would be that the shadow banking system — securitization markets — will come back, will be a substantial part of the U.S. credit system.  But they will certainly, at least in the medium term, be simpler, smaller, less opaque, subject to more oversight by regulators,”

These are positive words from the Fed cheif, but it seems we will have to be patient to see a full recovery of our badly damaged economy.