Green Retirement

The U.S. economy grew at 3.5% in the third quarter of 2009.  The worst recession since the Great Depression is over.  Take a moment to stop looking for a job, spend some of your unemployment money on a bottle of champagne, pop the cork and let’s celebrate!

Not buying it? Don’t believe the recession is over? Think the numbers are bogus?  Smart you are.  A recession is declared when the GDP shrinks for two consecutive quarters, and a recession is declared over, when the GDP rises for one quarter.  The GDP consists of consumer spending, manufacturing, exports, government spending.   Consumer spending accounts for 70% of the U.S. GDP.

When the recession started, and American workers began getting laid off, those that had been laid off and those who were worried about getting laid off, cut back on their spending sending the GDP into a nose dive.  In response, the U.S. Government embarked on a massive stimulus program, to counter the decline in consumer spending.  The third quarter GDP result of 3.5% was produced by the cash for clunkers program, an $8,000 first time home buyer credit, and stronger exports from a weakened dollar.

Without the U.S. Government pouring tens of billions of dollars, into the hands of Americans to spend on houses and cars during the third quarter, the recession would not be over.   The cash for clunkers program is done and the first time home buyer credit will end soon.  How is the U.S. Government going to create positive GDP growth in the fourth quarter and beyond?  What tricks and gimmicks will they use to keep our consumption economy growing?

In an effort to keep the U.S. economy growing, the Obama administration is asking Congress to extend the first time home buyer credit, extend unemployment benefits, and is proposing to give retired seniors a $250 check in 2010.  To keep the economy growing, and the housing market from crashing again, the Federal Reserve will leave interest rates at zero.  Government spending and manipulation is unsustainable, as huge debts and deficits become increasingly difficult to finance, and artificially low interest rates will eventually create another stock market and housing bubble.

The problem is that U.S. economic GDP is 70% consumption.  As long as their is 10% unemployment and growing, consumption is going to continue to decline, and so will the GDP.  A true economic recovery, not a government manufactured recovery, will only occur when unemployment begins to decline.  When more Americans have more money to spend.  And when Americans become confident that they are not going to lose their jobs.

If the unemployment situation does not change in the next couple of quarters, where more jobs are being created than are being lost, the great economic recovery will end and the U.S. economy will experience a double-dip recession.

If you have been delaying your retirement, you should consider taking advantage of the recent stock market and housing market rally, and retire now.  Visit the Green Retirement website, find out how much savings you really need to retire, and try our Free Retirement Planning to discover when you can retire.