It appears that the U.S. economy may finally be dragging itself out of the economic doldrums. At least, that is what the third-quarter Gross Domestic Product indicates. The GDP showed that the U.S. economy grew at a 3.5% annual pace in the third quarter, snapping a four-quarter contraction streak.

The growth is attributed to the massive government stimulus, which led to higher consumer spending. In addition, a reduction in inventories and robust government spending helped spur growth in the third quarter. But even excluding the influence of auto sales, production and inventories, the economy grew 1.9 percent last quarter.

Some of the jobs that have disappeared through this recession are gone forever, it seems. Even when the market turns, and even gains momentum, we could be stuck with a fairly weak employment market for a while. The recovery will take longer than we'd like, putting more distance between now and the top of the next market run. We've lost 7.2 million jobs since December 2007, and the predictions of some economists that we'll get them back by 2014 may actually seem optimistic.

Unemployment is at 9.8%, and it's expected to clear 10% early next year. Then, we have the specter of a jobless recovery with which to contend. "Full employment" is often considered to be an unemployment rate of 4% to 5%, but it could be a while before we get there. The last downturn, following the dotcom bust, resulted in a peak unemployment rate of 6.3% in 2003 ... and we're already well past that.

Why is the recovery going to be such a grind? Check out the four major reasons after the jump.

There are two opposing schools of thought on the current economic condition. One the one side are those who for see a "double dip" recession with the downturn continuing into next year. On the other side we have another group who see economic growth picking up rather than slacking off next year.

The Economic Cycle Research Institute has developed an index that "predicts" future growth (RPT-ECRI). The index is predicting record growth rate shooting to a hitting a record high. Its weekly leading index rose to 128.3 from 127.1 the prior week.

The Commerce Department released GDP numbers today for the second quarter, and showed that the economy shrank less than expected for the April - June period.

According to today's report, second quarter GDP figures dropped by 0.7%. Before the report, analysts had been expecting to see that GDP actually dropped by 1.1%, providing some fresh evidence that the economy will probably start growing again during the second half of the year.

It appears that a majority of economists believe that the current recession in the United States is going to end this year. The National Association for Business Economics (NABE) will release today a survey that reflects this belief and is in line with a forecast from Fed Chairman Ben Bernanke and others.

According to the survey, 74% of the forecasters believe the recession will end in the third quarter, with 19% pegging the fourth quarter as the final quarter for the recession. The remaining 7% believe the first quarter of 2010 will be the recession's swan song.

Congressional Democrats, including Sen. Robert Byrd, D-W.Va, are pushing for the enactment of a second economic stimulus bill worth $24 billion, including a $6 billion lifeline for the beleaguered auto industry. Odds of it passing in a presidential election year are slim to none.

Democrats, though, are giving the people what they want. Regardless of whether it's a good idea or not, it's fantastic politics. Democrats can prove to voters, who are fed up with the lousy economy, that they "feel their pain," leaving aside the debate of whether it's needed.

That explains why House Speaker Nancy Pelosi, D-Calif., says that the second stimulus bill will need to have bipartisan support -- as the first one got -- because it is vital for the economy. Like the first economic stimulus plan, Byrd's bill will be temporary, targeted and provide disaster relief, according to CQ Politics.com.

"The Speaker earlier had vowed to enact a second measure, totaling at least $50 billion, before Congress leaves this year," the website says. "But the president and congressional Republicans have been less enthusiastic about the idea, repeatedly arguing that lawmakers should wait to assess the impact of the tax rebates and other incentives enacted in February."

The New York Times reports that the European Central Bank raised its equivalent of the Fed Funds rate to 4.25%. Meanwhile, Bernanke's economic wrecking crew has kept the U.S. rate at 2%. Investors will sell dollars and buy Euros. That will cause the dollar to lose even more of the 72% it's lost since January 2001. But none of this is really happening because AFP reports that President George Bush has declared that "we're strong dollar people."

The key to U.S. policy is repeated denials of the obvious -- which is that U.S. policy is consistently intended to weaken the dollar. The reason is that a weak dollar makes the goods of big U.S. corporate exporters relatively cheap when they sell overseas. And of course, since oil is traded in dollars, a weak one causes the price of oil to spike. It now resides at a comfortable $146 a barrel, up 508% since January 2001.

But Reuters reports that Treasury Secretary Hank Paulson -- who last year brought us "subprime is contained" -- now says that the weak dollar is not to blame for high oil prices. With apologies to the old E.F. Hutton advertisements -- which said "When E.F. Hutton talks, people listen" -- when Hank Paulson talks, people snicker.

The U.S. economy will most likely exit from a recession by the end of September 2008, according to a new survey of business economists by the National Association for Business Economics.

A majority of economists expect gradual growth to return by the end of next quarter, Q3 2008, as credit market conditions improve, the NABE said. More than 60% of the economists surveyed predicted that businesses and consumers will find it easier to borrow in the second half of 2008.

However, the percentage of economists who said the United States economy is in or near a recession increased to 56% in April 2008 from 45% in February 2008.

The NABE panel expects little economic growth in the first half of 2008, but anticipates a significant pickup in the second half. For 2009, the NABE expects GDP to increase 2.7%.

Economists: optimism nudges higher

Economist Peter Dawson, who did not participate in the NABE survey, told BloggingStocks Monday the NABE results suggest economists are beginning to become somewhat more optimistic about the U.S. economy's prospects, particularly for 2009. "Recent data has been encouraging regarding credit market conditions and export data, but I want to caution investors that we still have major housing and energy price headwinds," Dawson said. "But if the data continue to point to an economic bottoming this quarter, most would interpret that as on-track, that things are moving in the right direction concerning the economy."

Dawson added that he still expects the U.S. economy to register negative growth -- contract by 0.7% and 0.4% -- in Q2 and Q3 2008, respectively, before growth resumes in Q4 2008.

Economic forecasters and analysts are beginning to give in to recession language, with 51% of respondents to a poll conducted by the National Association for Business Economics (NABE) indicating they believe that a stalled economy is where we may be headed. An Associated Press report indicates that 70% of all survey respondents feel the economy shall grow 3% or less in the first half of this year. A whopping 30% of respondents indicated they feel the economy shall actually contract.

Associated Press stated, "The majority of forecasters polled -- 51 percent -- thought the economic growth during the first half of this year would clock in between zero and 1 percent, which would still mark a feeble showing. Sixteen percent pegged growth in the first half at between 1 and 2 percent, while only three percent put it at between 2 and 3 percent."

The question is whether or not consumers and their discretionary incomes shall tip the economic balance into classically defined recession. While inflation has a greater portion of personal incomes being utilized for the necessities of life, these days it's generally the optional "extras" that stimulate economic growth numbers. Recreational electronics, home entertainment devices, and items of fad and fashion make up the bulk of growth industries today. To what extent will they bear up and in what measure will they support domestic economy?

Your guess is as good as mine...

Gary Sattler is a freelance blogger and former sole proprietor of a thriving retail establishment.

The euro hit an all-time of $1.5915 versus the dollar Thursday, only to become subject to an increasingly rare event in currency markets these days - - a dollar rally.

That's right: you read correctly. The dollar rallied, getting off the deck, as it were, from its record-low versus the euro to gain more than 1 cent for the day to trade at $1.5741 late Thursday.

Trading is likely to be calm to inert heading into Friday, due to the G-7 meeting in Washington of the world's major central bankers and finance ministers.

What inspired the dollar's rally? Independent currency trader Andrew Resnick told BloggingStocks the currency markets interpreted Thursday's lower-than-expected 357,000 U.S. initial weekly unemployment claims as a strong point for the ailing U.S. economy. That fact, combined with the belief that the previous week's claims may have been inflated, due to the earlier Easter holiday, sent traders into buy-dollar mode.

First the good news: Congressional Democrats are talking up the idea of a second fiscal stimulus package to help jump start the U.S. economy.

Now the bad news: Congressional Democrats are talking up the idea of a second fiscal stimulus package to help jump start the U.S. economy.

U.S. House Speaker Nancy Pelosi, D-California, said she would raise the prospect of a second stimulus bill when she and other Congressional leaders meet with President Bush this week, CNN reported Monday.

Anemic U.S. economy

Speaker Pelosi did not provide specifics but said March 2008's "disturbing unemployment numbers" which indicated the nation's economy lost 80,000 jobs "compels the President to work with Congress on a second stimulus package to get our economy back on track, create jobs, and speed assistance to families struggling to make ends meet," CNN said.

On Monday, the Bush Administration said it was too soon to talk about the need for a second economic stimulus package because the first one had not been fully implemented yet, Reuters reported.

As economists and stock reviewers will vouch, analysis can vary depending one's prism, or perspective -- i.e. how one views the economic world.

Look at the 2008 U.S. economy one way, and you see the onset of a conventional recession. Five or so years of GDP growth, earnings growth, investment, resource / commodity / raw material utilization, and consumption have basically run their course, and a pause is due. It's a period of lower earnings, less investment, lower consumption, and we call these pauses recessions.

Look at the 2008 U.S. economy another way and you see a different picture. Five or so years of GDP growth, earnings growth, but also substantial asset price inflation - - primarily in residential real estate - - combined with only modest improvement in the U.S. trade deficit, federal budget deficit, national savings rate, and a substantial weakening of the U.S. dollar. Then, a period of slower growth ensues, a slowdown made all the more onerous by the appearance of a credit crunch that began when the real estate balloon began to deflate, if not burst.

With all the hysteria about global warming and the impact that it will have on the globe, I found it quite funny that the National Oceanic and Atmospheric Administration (NOAA) reported yesterday that we just experienced the coldest winter since 2001. Hey Al Gore -- how can that be? I remember when I was growing up, in the mid- 1970's, Newsweek magazine had a cover story about the beginning of the ice age. Amazing what can happen in 25 years. We can go from an ice age, to global warming. Not bad.

According to the NOAA report:

"In the contiguous United States, the average winter temperature was 33.2°F (0.6°C), which was 0.2°F (0.1°C) above the 20th century average – yet still ranks as the coolest since 2001. It was the 54th coolest winter since national records began in 1895. "

Why not ask the Chinese about global warming? They just experience a horribly snowy winter which has been a major cause of inflation. Extreme cold temperatures were the norm this winter. Over the last 150 years or so the global mean temperature has increased by 0.7 degrees Celsius. This small amount of warming is not unusual, and falls well within the range of variation for both warming a cooling.

A team of Goldman Sachs (NYSE: GS) analysts keeps track of the price of oil going out four years. They are beginning to revise their forecasts upwards.

According to MarketWatch,"Tacking on $15 a barrel to all of its oil estimates, Goldman now sees average selling prices of $95 a barrel for 2008, $105 a barrel for 2009 and $110 a barrel for 2010. The high end of its range is now $135 a barrel -- but Goldman hinted that prices could be headed even higher." Obviously, the brokerage thinks oil will come down some, at least for a time, but the overall trend will stay up.

One of the analysts' biggest concerns is what will happen when the U.S. economy begins to grow rapidly again. Worldwide supplies will likely still be at current levels, but if a environmental disaster or political upheaval at one of the big oil producers cuts supply, Goldman predicts that prices could hit $150 to $200 a barrel.

It is hard to imagine with crude at that level that several large American industries would survive, at least with their current cost structures. Foremost among those would be the automotive and airline industries. Retail outlets would also be hurt by less frequent traffic caused by an attempt by customers to cut the miles traveled in their cars.

What could the government do if gas prices rose sharply from their current level of about $3 a gallon? It would cost states and the federal government billions of dollars, but they could eliminate the tax on gas consumption. Of course, they would probably have to raise taxes somewhere else to make up for that.

Douglas A. McIntyre is an editor at 247wallst.com.

The economic landscape -- particularly for the United States -- certainly looks different than it did 30 or 40 years ago.

Globalization, the internet, and the rise of a second major economic power in Asia are all developments that would look rather odd to someone in, say, 1973-74. The world in 2008 is one characterized by economic change -- one that may usher-in even more historic political change in the months ahead.

But there has been one constant between the two eras (overlooking cyclicality): the price of oil. It was high, in real terms, in 1973-74, and it's high now. And one thing economists like Glen Langan know regarding economic conditions when oil's price is high -- it simply makes the cost of moving things, the cost of doing pretty much everything, more expensive. Whether it's dropping the kids off at little league baseball or at soccer practice, or transporting a supply chain order of refrigerators across the country, a high oil price "simply increases the cost of motion," he said. And there are few positives for the U.S. economy. Further, it takes dollars that could create spin-off economic effects -- disposable income that could be spent somewhere else -- and simply removes them from the economy.