Cash for Clunkers will put GDP over the top in Q3
You may have heard the reports that US auto dealers were swamped on Monday night as the car scrappage scheme dubbed “Cash for Clunkers” expired. American taxpayers were eligible for a tax rebate of up to $4500 for trading in an older gas guzzler for a new vehicle. And all evidence shows that they took the government up on the offer – in droves. According to the U.S. Department of Transportation, there were in excess of 625,000 transactions for $2.58 billion in rebates.
While I tend to think this scheme is pulling forward demand for vehicles, it is going to mean a huge boost to Q3 GDP. Unless we get a relapse in Q4 or Q1 2010 when I had expected the recession to end, the recession is technically over right now in all likelihood.