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.