The Stimulus - not so much it turns out
Everyone was hyperventilating when the Dow Jones index hit 10K a week ago. It then lost over 250 points. The rise was artificial caused by the falling value of the dollar and the reverberations from the Cash for Clunkers program which cost about $27K taxpayer dollars per transaction.
Peter Coy has a good analysis over at
Business Week:
Stimulus: The Good News, and the Bad
New figures released by the White House on Oct. 30 add to evidence that the federal economic stimulus package is working to create and save jobs. Unfortunately, that's not altogether good news.
Why not? Think about it: If the stimulus is working, and the job market is extremely weak in spite of it, what will happen when the stimulus begins to fade sometime next year? Many economists are increasingly worried that the U.S. recovery will be agonizingly gradual, especially if it doesn't get another jolt of help. "I think it makes sense to look at more aid from the federal government, whether they call it stimulus or not," says Gus Faucher, director of macroeconomics at Moody's Economy.com, a West Chester (Pa.) consultant.
The White House report said $160 billion worth of the stimulus funds spent so far—out of the $787 billion total in the stimulus plan—have "created or saved 640,329 direct jobs" through the end of September. The almost comically precise number is based on reports by recipients of stimulus funds. The White House says the actual number of jobs saved or created is greater than that—probably more than 1 million—because the $160 billion measured represented only about half the money spent so far, and because people who are hired with stimulus funds tend to spend their pay and create secondary employment.
Those are the numbers from the White House. Now let's look at the big picture:
A million or so jobs sounds good until you remember that U.S. employment has fallen by more than 7 million since the recession began in December 2007. Economists estimate that the economy lost roughly 200,000 more jobs in October alone.
On Oct. 29 news reports greeted the 3.5% estimated growth rate of the economy in the third quarter as evidence that the deep recession was finally over. However, much of that growth came from stimulus programs such as cash for clunkers and the tax credit for first-time home buyers. Without those, President Obama's chief economic adviser, Christina Romer, said on Oct. 29: "Real GDP would have risen little, if at all."
Why these people don't lower taxes and shrink the government is beyond me. This is the only thing that has worked in the past and it would work again now if people did it.
The appearance of careful government management is actually a careful governmental management of appearances.
Posted by DaveH at October 31, 2009 2:26 PM
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