Wednesday, June 3, 2009

Stimulus Money Still Slow to Arrive

I've been reading plenty of reports that the stimulus money has been trickling out slowly. My largest criticism of this plan has been that it won't take effect quickly, and the economy is likely to stabilize on its own, thus leaving us paying the bill for something that may not have been needed. I'm aware there are certain items discussed in this bill that are important (updating power grid, some infrastructure projects etc.), but they aren't going to be completed yet. My opinion is that they used the crisis to pass a bill that was labeled "economic stimulus", and just delayed most of the spending until a later date. It would be better to categorize this as a spending bill disguised as a stimulus bill. Remember the Rahm Emmanuel quote of "never let a good crisis go to waste." This sort of activity normally could be tolerated, but now is about the worst time to add more debt to our balance sheet.

Bloomberg had some info on this today that I wanted to pass on:

  • “It seems like the federal stimulus is trickling down very slowly,” says Beaumont, chief assistant director of public works for Marin County, north of San Francisco. “My feeling is it’s not finding its way into the economy as quickly as it should.”
  • The $787 billion package Congress passed in February is having less impact than economists expected in pulling the U.S. out of the worst recession in at least 50 years. About $111 billion in planned infrastructure spending is arriving so slowly that recovery in the final six months of 2009 may be weak.
  • “Most of the stimulus still hasn’t yet reached the real economy,” says Robert Solow, professor emeritus at the Massachusetts Institute of Technology in Cambridge, who won the 1987 Nobel Prize for economics. “It will help us a lot in the second half of the year. But given the collapse in consumer spending, business investment and state and local government spending, I think it’s premature to be getting optimistic.”
Some positive news came from Caterpillar, but appears to be more anticipation than anything concrete:

  • Jim Owens, chief executive officer of Peoria, Illinois- based Caterpillar Inc., said his dealers are seeing some benefit.
  • “People are starting to bid work again,” Owens, whose company is the world’s largest maker of bulldozers and earth- moving equipment, said on NBC’s “Meet the Press” program May 31. “It’ll have a positive impact and I think we’ll start to see that kick in through the summer and into the fall.”

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