Have we solved the problems in our economy or just postponed them?

Last week, the government announced that third-quarter GDP grew a solid 3.5%. That was quite a relief coming off four consecutive quarters of negative growth. Gains in the auto and home building sectors led the charge. Those two sectors in particular benefited from federal stimulus programs and without the stimulus, "Real GDP would have risen little, if at all, this past quarter," according to Christina Romer, president of the White House Council of Economic Advisers.

Proponents of stimulus spending say it's doing exactly what it should do - it's helping the economy grow. Critics say we're just delaying another inevitable deep economic adjustment and it's better to take our medicine now than suffer death by a thousand cuts.

The stock market seems confused lately as to which strategy - more stimulus or the end of stimulus - is better. Last week, for example, the Dow Jones Industrial Average experienced three triple-digit declines and one triple-digit advance as investors vacillated between a positive and negative outlook for the economy. This volatility may suggest that after a substantial rise in the markets since early March, investors are pausing to reflect on where we go from here.

 Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not applicable or not available.