It's certainly tempting to think so, give the role government stimulus plans and incentives now have in shaping the private sector US economy, which is unprecedented outside of the WW2 period. The 3.5% annualized growth rate reported is no real surprise, as it has been clear that the economy bottomed in Q2. The bulk of US stimulus spending still lies ahead, and will underpin growth through H1 2010, but the key question is whether the economic tinder lit by huge government deficit spending can catch fire in the broader economy, or will it simply crowd out private business investment?  Excluding autos, Q3 GDP advanced at a more modest 1.9 percent pace. That was a vast improvement, following four sequential quarters of decline, but it was disappointing given the scale of monetary and fiscal stimulus now coursing through the US economy's veins. 

The turnaround in residential investment, which added to GDP for the first time since 2005, was bullish and reflects a steep fall in inventory levels (and the physical deterioration of much of the housing overhang to the point of rendering it unsaleable), but also government efforts to prop up the housing market. Congress is debating whether to extend an $8,000 tax credit for first-time home buyers, which has been crucial in boosting sales, and it looks likely to do so.

Over the last 12 mths, the economy has contracted 2.3%, having shrunk 0.7% annualized in the second quarter and 6.4% in the first quarter. Final U.S. sales rose at a 3% annual pace in Q3, the fastest in more than three years, and that offers hope that the inventory cycle may be about to turn as retailers and manufacturers restock. Overall, the prospects of a double-dip recession are minimal, as I've long believed.