Thursday, February 18, 2010

Is Obama's Stimulus Plan Working?

According to the most modest man on Earth, YES!  According to a recent Wall St. Journal Poll, nearly 60% of the respondents gave our President's handling of the stimulus program a grade of F.  Marko's Take agrees.

Since Mr. Humble doesn't read Marko's Take, let's let him enjoy his world of fanstasy.  Since we live in the real world, let's take a hard look at the facts.

According to a Wall Street Journal article, the Obama administration's economic-stimulus program has delivered about a third of its total $787 billion budget during its first year, much of that to maintain social services and government jobs and to provide tax cuts for workers. Now, the pace and direction of stimulus spending are about to change

Infrastructure spending is set to step up in the second year of the stimulus program, which should mean more money flowing to private-sector employers.  Still, economists say that won't likely have a big effect on the unemployment rate, which most say ought to continue a slow decline as the broader economy recovers.

Most of the spending, thus far, has gone to enhance government, which we KNOW is a GREAT way to
stimulate the economy (sarcasm intentional).

Proponents of the stimulus program focused attention on infrastructure projects during the fight to win approval for it last year.  But, the bulk of the money proposed for projects like new rail lines and water projects — about $180 billion in all — is likely to be spent this year at the earliest.

During year 1 of the stimulus, only about $20 billion was handed out for infrastructure projects.  Of the $179 billion in stimulus funds paid out last year, $112 billion has gone out in the form of large checks to state governments to plug holes in school, Medicaid and unemployment-benefits budgets, or to increase funding for established programs, such as food stamps, according to a Wall Street Journal analysis.

But surely we must be seeing some major economic improvement?  NOT!  Economic data released today continues to verify that things are growing worse.  The Producer Price Index (PPI) came in at a whopping 1.4%.  Thank God, the Fed isn't too concerned (sarcasm intentional).

Fed officials expect the widely watched consumer price inflation index to stay between 1.3% and 1.6% this year, minutes of their latest meeting at the end of January showed Wednesday.  Core inflation is seen at an even lower 1.0% to 1.5% range by the central bank.  And we know how good their track record is (sarcasm intentional)!

We also have more "good news" on the employment front.  Initial claims for jobless benefits rose by 31,000 to 473,000 in the week ended Feb. 13, according to the Labor Department's weekly report Thursday. The previous week's level was revised upward to 442,000 from 440,000.  Economists surveyed by Dow Jones Newswires expected initial claims to increase only by 5,000.

Still think the Stimulus Plan is working?   If so, by all means, TAKE ME ON!

Marko's Take

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