CBO Estimates Stimulus Boosted Q2 GDP By 4.5%, Standalone Number Is Likely Under Around -3.5%

Due to the various inventory and trade deficit overestimates by the CBO, the initial Q2 number is about to be revised much lower: realistically, it will come out at under 1%, although that will likely be saved for the second and final revision: therefore the adjusted number to be reported on Friday will likely be around 1.8%. Yet the real kicker is not that the government has ramped up data fudging to make poor China blush like a rank amateur, but that according to the CBO, of whatever the final Q2 GDP number is, 4.5% came from the stimulus. In other words, take away the end of the fiscal boost and the economy is accelerating its relapse into depression, just as Rosenberg (and Zero Hedge) have been claiming for about a year, over the din of the cheerleaders on propagandavision.

From Reuters:

The massive stimulus package boosted real GDP by up to 4.5 percent in the second quarter of 2010 and put up to 3.3 million people to work, the nonpartisan Congressional Budget Office said on Tuesday.

CBO's latest estimate indicates that the stimulus effort, which remains a political hot potato ahead of the November congressional elections, may have prevented the sluggish U.S. economy from contracting between April and June.

Economists surveyed by Reuters expect that revised numbers due out on Friday will show that the economy grew at an anemic 1.4 percent pace during that time period -- less than the boost of at least 1.7 percent that the stimulus provided, according the CBO estimate.

Additionally, in appropriating of concepts from Alternative Unvierse theories, the CBO somehow estimates that the stimulus created up to 3.3 million jobs.

[The stimulus] raised employment by between 1.4 million and 3.3 million jobs during the second quarter of this year, CBO estimated.

Measured another way, CBO said the stimulus increased the number of full-time equivalent jobs by up to 4.8 million, as part-time workers shifted to full-time work or employers offered more overtime work.

So now that the stimulus is tapering off, America has the following rather unpleasant things to look forward to: a 4.5% reduction in run rate GDP as the direct economic boost disappears, the gradual loss of 1.4 to 3.3 million of jobs, and the eventual realization that non-recurring, one time items can not be projected into perpetuity, despite what Keynesian dogma may preach.

h/t Mark's Market Analysis