Recovery in Reverse?

Existing home sales and new home sales fell to a record low in July. GDP will be released Friday and the outlook is dim, leaving people to question what will spark this economy. The low numbers, however, do not have Brian Wesbury, Chief Economist at First Trust Advisors, worried.

Wesbury joined Varney & Co. this morning to express his optimistic outlook for 2010. A few months ago, Wesbury forecasted a 3.5% to 4% growth for calendar year 2010.

Although the U.S. only experienced a 2.8% growth in the last four quarters, he thinks the economy is doing well.

"One of the reasons we've had a 2% growth, a slow growth in the second quarter, was because imports surged 35%," said Wesbury. "So what that means is our businesses and the U.S. consumer bought 35% more stuff from overseas."

Despite a 5% growth rate in the last quarter of 2009, a 3% growth rate in the first quarter of this year, and an initial projection of a 2% growth rate for the second quarter of 2010, Brian Wesbury is not calling it a weak economy. Instead, he is calling it a booming economy.

A fifteen year low in existing home sales does not have Wesbury concerned. "We just had an $8,000 tax credit expire in June," said Wesbury. "People have to be crazy to buy a house in July. No wonder the number was weak."

GDP will be released Friday, which will provide a comprehensive, up-to-date picture of the economy. Although it is expect to be below 2%, Wesbury is not worried. "The GDP is made up of more than one number," said Wesbury. "It's got consumer spending, government spending, and investment. Business investment and consumer spending in the second quarter grew 4% at an annual rate. It is at an all time record high."