Did You Know That 35% Of Stimulus Remains Unspent?

By Justin Gardner | Related entries in Economic recovery, Economy, Money

To those who claim that the stimulus has failed, well, many serious economists and the the CBO say that without it we’d be in much worse shape. And even those who opposed it are wishy washy about it effects…which basically means it helped.

Regardless, a large chunk is still waiting to get into the economy and here’s more on what that means for the US and investors, from Clusterstock:

Despite talk about how the U.S. economy will soon lose the support of economic stimulus, or that stimulus ‘hasn’t worked’, U.S. fiscal stimulus for the economy is far from finished, and this doesn’t even consider additional measures being debated. [...]

This $278 billion will likely be delivered by the end of 2010, and it’s a huge sum for just four months. Thus the remainder of 2010 will continue to be supported by stimulus, and investors should take note. 2011 is when the economy will lose its training wheels, though an additional round of economic initiatives currently being debated could push the timeline back even further.

Couple this with the tax breaks for small businesses and the additional infrastructure spending that Obama is proposing and we’re looking at a situation where we’ll hopefully see unemployment drop below 9% by the end of winter. I know that’s 1% off what Obama and company said it would be at, but how can you fault them for not anticipating that the economy was in worse shape than they thought.

And what about those on the other side that said this thing could fix itself? Again, nearly every serious economist who doesn’t blindly follow the invisible-hand theory knew we need stimulus of some sort and that we would have been FAR worse off had we a) not done anything or b) just went with the tax cuts Republicans were proposing since those are proven to be far less stimulating to the economy than direct spending.


This entry was posted on Thursday, September 9th, 2010 and is filed under Economic recovery, Economy, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “Did You Know That 35% Of Stimulus Remains Unspent?”

  1. kranky kritter Says:

    That’s a good question. What percent of folks thought that the stimulus was all dumped into the economy at once? I’m sure some folks sort of assumed that without really thinking about it.

    But I for one was well aware that it was being dumped into the economy with a ramp up, a peak and a gradual ratcheting down. We’re now seeing something that sure feels like a stall in the economy as the rate of stimulus funding is decreasing.

    We know that car sales tanked after cash for clunkers ended. And we know that the real estate market faltered after the new homebuyer tax credit ended.

    Right now, every contested governor’s race includes debate about what that state will do with its budget when federal subsidies end. The training wheels WILL have to come off. And the forecast calls for pain.

    And sure, most democrats think we need to keep propping things up. We’ll probably see a bit more propping up by the feds, but at a much scaled back rate on the way towards fiscal sanity. This fall, Obama will sit at the table with a closely divided congress to hammer out an approach that leaves hardcore partisans of both wings unhappy. Just like Clinton did.

    Remember when Liberals insisted on a timetable for withdrawal from Iraq, insisting that we could not continue to prop up Iraq? And remember how Conservatives insisted that a timetable was insane, that we had to support Iraqis until the success of Iraqi democracy was virtually ensured?

    Fastforward. Now the Republicans want a unilateral withdrawal of the federal government from propping up the economy. Democrats are insisting the feds must stay involved until success is ensured. Could the irony be more delicious?

  2. Alistair Says:

    And it may look as though he’s got one GOP that will help pass the small business incentives in Senate bill.

    http://www.washingtonpost.com/wp-dyn/content/article/2010/09/09/AR2010090903599_pf.html

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