Economists Raise Forecast: GOP Plan Not Working?

      I admit it seemed like a pretty good plan, the GOP thought it was airtight: just let the economy tank, do nothing to help it and then run against Obama on how bad the economy is tanking and how it's his failure rather than it's own.

     However, you know what they say about the best laid plans, and yesterday economists raised their predictions for the third quarter sharply, suggesting that despite their best efforts, the economy may be coming back a little.

     Economists now estimate that the economy grew at an annualized pace of 2.5 during the third quarter, almost double the 1.3 in the second and a major jump on what was being feared just recently.

    If these better predictions are true it may show that many of the factors that drove down the economy in quarter two were temporary-oil prices, Japan's earthquake, etc.

    This despite consumer confidence numbers at the worst level in 3 years:

    "While consumer confidence crumbled to levels last seen during the 2007-09 recession. and some business surveys pointed to a contraction in factory output, so-called hard data measuring actual activity continued to show modest growth."

    "Data from retail sales to factory orders to manufacturing output painted a portrait of households and businesses not shy to spend, despite feeling terrible about the economy. "

    "We are looking at consumer confidence numbers which are as bad or worse than at the bottom of the recession when we were losing about 800,000 jobs a month," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.

     With the constraints mentioned above having eased-gasoline prices, the earthquake in Japan-"Auto production rose at an annual rate of 21.4 percent in the third quarter after contracting 15.8 percent in the second quarter, according to Federal Reserve data."

     "Further, car sales, which were held back by the lack of popular models, have also shown new vigor. In September, auto sales jumped 3.6 percent."

     "That strength is expected to drive overall consumer spending, which accounts for about 70 percent of U.S. economic activity, at a 2 percent pace or better. In the second quarter, it advanced just 0.7 percent, the smallest gain since the fourth quarter of 2009."

      "While some of the factors behind the expected third-quarter growth spurt could be perceived as temporary, economists believe the momentum will be sustained into the end of 2011."

     "However, they caution that Europe's debt crisis could derail the U.S. recovery if not dealt with decisively, as could a failure by Congress to keep in place economic supports."

     So there is hope for Operation Tank the economy:

     "A temporary payroll tax cut and emergency extension of unemployment benefits will expire at year end, absent congressional action. At the same time, Republican lawmakers have shown little appetite to move forward with other elements of President Barack Obama's $447 billion job creation plan."

     "If they do end up with total gridlock where tax cuts expire and spending gets choked off, then the outlook would be quite a bit worse."

      All quotes found here http://www.cnbc.com/id/45041466