Economists are currently divided on the issue of how strong the US economic recovery is going to be. Some are of the view that as a result of the stimulus policies of the Fed and the Federal government, the recovery is going to be quite strong. Some others are more pessimistic given still-rising unemployment, which they believe will keep consumer spending subdued. In October the unemployment rate jumped to 10.2% from 9.8% in the previous month and 6.6% in October last year.
Most economists assess the so-called economy in terms of gross domestic product, or GDP. This indicator reflects the amount of money that was spent during a period of time on final goods and services.
The major component of this indicator is personal outlays, which comprise almost 70% of GDP. Obviously, the more money people have, the greater the spendable income is going to be, hence the greater the GDP is going to be. Consequently, fluctuations in money supply lead to fluctuations in spendable income and thus to fluctuations in GDP. To establish the rate of growth of "real GDP," changes in GDP are adjusted for changes in the prices of goods and services.