Economic experts credited the Obama administration's stimulus plan with helping boost the nation's gross domestic product, but Republican lawmakers warned at a Thursday hearing that the effect could be short-lived.

Earlier on Thursday, the U.S. Commerce Department's Bureau of Economic Analysis released data showing the GDP increased by 3.5% in the third quarter.

Several Republican lawmakers noted that the biggest component of the 3.4% rise in consumer spending in the third quarter came from car sales, spurred by the July and August "cash-for-clunkers" federal rebate program.

"Was this the equivalent of pouring Red Bull into the economy and now we're going to have to come down from that caffeinated sugar high we had over the summer?" asked U.S. Rep. Michael Burgess (R, Texas) at a congressional Joint Economic Committee hearing.

Steven Landefeld, director of the Bureau of Economic Analysis, noted that even without motor vehicle sales, real GDP still grew by 1.7 percentage points. Real spending on durable and nondurable goods and services all increased during the third quarter.

"It is heartening news to see across the board improvement in so many components this quarter," Landefeld said.

Several prominent economists testifying at the hearing directly linked the growth in GDP with the $787 billion stimulus package approved by the Obama administration in February.

"My estimate is the stimulus contributed somewhere between three and four percentage points to the growth," said Mark Zandi, chief economist at Moody's Economy.com. Most important, the government bailout provided critical aid to unemployed workers and helped state and local governments avert severe budget crises, he said. "Without that stimulus, the economy would still be in negative territory."

Simon Johnson, an economics professor at the Massachusetts Institute of Technology, agreed that the stimulus helped reduce job losses and maintain confidence in the economy. But both Zandi and Johnson cautioned that the recovery will be slowed by businesses' reluctance to hire new workers. Zandi predicted that reports due next week will show the joblessness rate hitting 10%.

"This is not going to be one of the fastest recoveries on record, for sure," Johnson said.

Republican lawmakers were reluctant to read the rise in GDP as a sign of the stimulus package's success.

"This is no time to be conducting an end-zone dance," said U.S. Rep. Kevin Brady (R, Texas). He argued that a sustainable recovery must be driven by the private sector rather than government spending.

Democrats, meanwhile, seized on the news as proof that the stimulus plan is working.

"This is concrete evidence of the wisdom of the Recovery Act and the positive effect it has had on the economy in just eight months," said U.S. Rep. Carolyn Maloney (D, N.Y.). But she agreed that future government efforts must focus on creating more jobs.

"The stimulus has helped Americans in need weather the storm, but we must do more to get people back to work," she said.


To view the original article click here.