A few quarters of success attributable to government
policy do not mean that the policy was successful. Home
sales took off last April as the expiration of the New
Homebuyers Tax Credit neared, only to plummet this summer
when it became clear that the policy had merely pulled
demand forward instead of stimulating new demand. The
same thing happened with Cash for Clunkers, to a lesser
extent: A brief bump in sales of cars and light trucks
was followed by a steep drop. Sales have since gone up
slightly, but the latest forecasts predict weaker demand
for autos to go with weaker demand for housing and
continuing high unemployment.
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