No Surprise: Stimulus Isn't Working

Right now the unemployment rate is 9.5 percent. The administration had said that, thanks to their fiscal stimulus, it would be less than 8 percent.

I don't blame them for missing a forecast. Forecasting is difficult. And this labor market has been surprisingly bad.

I do blame them for misleading the public by saying that the stimulus package would improve the unemployment rate (relative to whatever admittedly unpredictable outcome it would have been without stimulus). The government claimed that, by June, the unemployment rate would be improved by almost 0.5 percentage points. That clearly has not happened.

Although we did not know the future of the economy, we knew the stimulus package wouldn't help.

Comments

[CautiousInv...:]

The stimulus and investment act is highly flawed, offering very little that was promised in campaign rhetoric.

Putting that aside, nobody knows how much of the stimulus package has been authorized and spent.

Of the $787 billion total, $280 will be handed to and spent by the states. I went to Recovery.gov and was astonished to learn that only $90 billion of the monies to be spent by the states will be spent in FY09, with some spending to be deferred to 2015.

Even is this dubious and wasteful spending were to have redeeming economic qualitites and the potential to assist the economy, it cannot deliver on its promise until it is spent.

When they said shovel ready they meant pitchfork ready.

Jul 05 08:06 AM

[swaps:]

The future solution is to not have to rely on emergency stimulus schemes but to once and for all abolish the Federal Reserve and start to manage money supply in a responsible way that results in steady, constant growth with healthy natural business cycles that are not egagerated by artificial manipulation or artificial suppression that ultimately breaks down spectacularly.
The Fed is a failure.
People who praise it are nuts, but worthy of employment by the mainstream massage media.

Jul 05 10:16 AM

[Mistrofan:]

The stimulus package can help only that much" as a bridge until the real economy picks-up. And the bridge is very thin by the way.

Jul 05 10:44 AM

[ain't no fo...:]

Heh, would that be like "The Bridge to Nowhere?"


On Jul 05 10:44 AM Mistrofan wrote:

> The stimulus package can help only that much" as a bridge until the
> real economy picks-up. And the bridge is very thin by the way.

Jul 05 11:39 AM

[Northstar10000:]

To our great congress. How could you spend a trillion and not read it
!@#@$%^&

Jul 05 04:50 PM

[Old Trader:]

"Putting that aside, nobody knows how much of the stimulus package has been authorized and spent."

If memory serves, I recall hearing/reading that $120B has been authorized (administration's number). Having said that, it IS hard to know how much actually has changed hands, despite all the talk of "shovel ready projects" while the bill was under debate.

Jul 05 08:31 PM

[Danny Newton:]

I don't understand how the federal government can do countercyclical spending. I can see how the state might dump money into a county or city to counteract a sagging local economy but how does that repair the reason for he sag in the first place? If the federal government trys countercyclical spending, they can only take from one area and give to another. It sounds like dipping money out of one end of the pond to replace the water in the other end of the pand and then claiming to have created a tidal wave.

Jul 06 09:52 AM