So, between actual spending and tax reductions, 2010 should see the direct impact of roughly $350 billion ($225 in spending and $131 in tax reduction). The real issue here is the multiplier effect -- how much of a larger effect will the spending have. Frankly, we won't know until the money is spent. But next year we'll see the ripple effect of the combination of tax cuts and spending. This will help growth.
Today the WSJ has an article on the effect of stimulus spending:
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 one of the stimulus, only about $20 billion of money was handed out for infrastructure projects."I think we'll see a lot more stimulus money get into actual contracts and actual hiring in 2010 than we did in 2009," said Kenneth Simonson, chief economist of the Associated General Contractors of America.
The ramped-up stimulus spending in 2010 will contribute 1.4 percentage points to gross domestic product growth this year, said Brian Bethune, chief U.S. financial economist for IHS Global Insight.
I have no idea as to the actual numerical effect on GDP. However, we're going to see some growth from it.
1 comment:
There is a side component to the
stimulus package that has provided
a tremendous benefit to our economy. That benefit is TIME. The
stimulus package bought time.At the end of 2008 we were about 25%
of the way realizing the losses from the financial meltdown by the time the stimulus package is having diminishing effects at the end of 2010 we will
have written down ( through securities losses,writedowns,and purchase accounting) about 80% of these losses. TIME is probably the most important commodity the stimulus package bought.
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