After a record four straight losing quarters, the economy finally grew again. It was hardly a boom, and it was almost all because of government spending.
But it was enough to change the question from when the recession will end to whether the recovery will hold.
Local business leaders react to the news:
Jeff Michael — Director of Business Forecasting Center at University of the Pacific
"To some extent, this growth is spurred by the economic stimulus package. Cash for Clunkers was a big part of this growth for sure.
Consumption grew by 3.4 percent, but most of that was driven by Cash for Clunkers. It would be characterized as weak growth. Residential investment across the nation is picking up, but it isn't here yet. The local economy isn't growing at the same rate as the nation's.
It's no doubt that the United States is out of the recession; locally, it's a close call. We projected the country to come out of it by Halloween, and here we are.
However, California is lagging behind the rest of the nation by a quarter. We are on the path to recovery. We have shown real growth, but it is in the form of borrowing from the next quarter.
We won't see 3.5 percent growth next quarter. It will be positive, though.
Overall, it's very mixed. But that is symptomatic of when you are at a turning point."
Kent Steinwert — President and CEO of Farmers and Merchants Bank
"The growth is primarily driven by government spending. Cash for Clunkers and the first-time homebuyer's credit are the biggest causes. Higher government spending is adding to the debt. It's questionable if this growth is sustainable.
High unemployment is still plaguing us and will offset improvements. We will still see a weak economy in 2010 and 2011 in California because it is unlikely stimulus funds will find their way into the Central Valley.
Agriculture remains strong, but consumer spending and housing starts remain weak. We won't see as great an increase next quarter.
The economy grew by expanding the role of government. It's not sustainable. Growth has to come from the private sector.
F&M is still strong due to conservative underwriting and practices. We haven't taken any government money and avoided the bad loans."
Scott Hudson — Agricultural Commissioner for San Joaquin County
"The increase is certainly welcome. I'm hopeful it reflects people buying higher-end agricultural products that we produce here, such as tree fruits and wine.
Agriculture has seen some decline in commodities, specifically dairy. Hopefully the increase in GDP means consumers are spending more on items such as our winegrapes and cherries.
The improving economy can be attributed to people gaining confidence and hopefully having money to spend on luxury items.
The agricultural economy in San Joaquin County has been fair. We have had some commodities that suffered. However, it continues to be a strong economy. Agriculture hasn't been as high as in other years but it's been stable. The most notable exception is dairy."