A basic tenet of Keynesian Economics is that, in times of recession, governments should cut taxes and/or increase deficit spending. The US government is doing just that right now.

However, and you knew there had to be a however for this to be a story, most state governments have to balance their budgets. In these hard times, that means they have to raise taxes and/or decrease overall spending. That means the requirements of their state budgets are working to cancel out federal fiscal stimuli.

While we’re on the subject, Keynes held that imports are a drain on GDP. When imports decrease, that shows up as a GDP increase, even though it may be indicative of a deeper economic problem, such as a collapse of demand in a nation. GDP in the USA can go higher in the recession due to this and fiscal policies and the economy can still be in the toilet. So if a talking head on the news should start bubbling about an increase in GDP for a quarter, look carefully at how much of that was due to a collapse in demand for foreign goods and unsustainable government overspending.