A little revisionist theory here.  We are on the road to recovery, the new GDP numbers speak for themselves. A 5.7% surge in our gross domestic product (GDP).  When our unemployment rate (8%) was substantially below the current 10% (official rate, unofficial 20%), we were chugging along in negative GDP growth. Now However, as the number of people who are unemployed grows by the day, the government says that we are spending more. What?  How is this possible? Excluding inventory buildup, the economy grew at a 2.2% of the annual growth rate compared to 1.5% in the previous quarter.

Based on these (they most likely will be revised) numbers, the administration is about to pour the bubbly.  Hold on guys, what the numbers indicate is not to be believed. Why is this so. For starters, Microsoft and their new operating system was a big reason for the upsurge in computer and software spending, Inventory increases were do to their replenishment during the Christmas Season and our weak dollar propelled foreign purchases. This is not to be repeated in the following quarters. Housing is still in a bust, companies are still laying off, consumers are not spending and businesses is afraid to expand not knowing what the future brings. All in all, we hail the 5.7%, but do not put too much faith in a number derived at the bottom of a V.

If it were not for Government hiring at all levels, the unemployment rate would be significantly higher. During the stimulus roll out, most companies reluctantly downsized as the government continue to grow. Look for more taxes, be they real estate or State Income Taxes (see Oregon) at the local level in order to balance budgets. This in itself will create a significant challenge to top line growth. But as we have said over and over again, GOVERNMENT EMPLOYEES (AKA Union Members) continue to enjoy the life of leisure on the BACKS OF THE AMERICAN TAX PAYING PUBLIC.