I’ll let you go over and read the words of Thomas F. Cooley and Peter Rupert. (Cooley is the the Paganelli-Bull professor of economics and Richard R. West dean of the NYU Stern School of Business. Rupert is a professor of economics and associate director of the Laboratory for Aggregate Economics and Finance at the University of California, Santa Barbara.) They explain why the people claiming that the stimulus is working are, well, silly.
But the most important stuff–the discretionary spending on infrastructure–has hardly started. By the end of the fiscal year, only 11% of the budgeted discretionary spending on highways, mass transit, energy efficiency and medical infrastructure will have gone out the door. This is the really direct government spending that many associate with the stimulus. By the end of fiscal 2010, Elmendorf estimates that only 47% of the infrastructure spending will have occurred.
There has been remarkably expansionary monetary policy in place for the last year. And there is the promise of massive spending, most of it in the future. If you, the reader, had to pick one as the key fact, would you pick the one that has already occurred and that clearly re-capitalized the banking system and restored liquidity, or the one that hasn’t hit yet?
What I found truly disturbing about the piece is in the very easily understood graphics that accompany the piece. They compare this downturn with several past events.
And they are very, very ugly. Real personal consumption expenditures down some 2%. Real gross domestic investment down 30%. Employment down some 5% from the previous peak. All of these numbers are grossly out of whack with previous downturns – in the wrong direction.
Worse yet, the numbers for this down cycle have not even begun to show any upturn.
If anything, the authors of this piece are starry-eyed optimists about the effects of the “stimulus”. The people pronouncing it a rousing success are not inhabiting the same planet as the rest of us.