The stimulus didn't help

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**Frazzled**

http://money.cnn.com/2010/04/26/news/economy/NABE_survey/

Economists: The stimulus didn't help
By Hibah Yousuf, staff reporterApril 26, 2010: 3:56 AM ET

NEW YORK (CNNMoney.com) -- The recovery is picking up steam as employers boost payrolls, but economists think the government's stimulus package and jobs bill had little to do with the rebound, according to a survey released Monday.

In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years -- but a majority of respondents felt the fiscal stimulus had no impact.

NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House's Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.

That sentiment is shared for the recently passed $17.7 billion jobs bill that calls for tax breaks for businesses that hire and additional infrastructure spending. More than two-thirds of those polled believe the measure won't affect payrolls, while 30% expect it to boost hiring "moderately."

0:00 /1:48Job growth ... now what?
But the economists see conditions improving. More than half of respondents -- 57% -- say industrial demand is rising, while just 6% see it declining. A growing number also said their firms are increasing spending and profit margins are widening.

Nearly a quarter of those surveyed forecast that gross domestic product, the broadest measure of economic activity, will grow more than 3% in 2010, and 70% of NABE's respondents expect it to grow more than 2%.

Still, the survey suggested that tight lending conditions remain a concern. Almost half of those polled said the credit crunch hurts their business.

**Kilkrazy**

Does that survey include car manufacturers and bankers?

**Frazzled**

Don't know.

**Kilkrazy**

Well it's hard to think you can throw 500 million dollars into the economy and not have any effect at all.

I mean, the UK may not be a valid comparison but we've had a year of record bank profits since the total collapse of all banking followed by me having to pay banks 100s of millions of £.

They should have given all the money to me. I would have taken a first class holiday in New York and restored the economy by myself, using the trickle down effect.

It is interesting how loudly people scream if 500 millions dollars is taken out of the economy by taxes.

**dogma**

NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms

NABE is already a tightly focused organization, and reducing that focus even further via a sample size of 68 makes this minimally relevant as a statistical contribution.

Seriously, this is more like a list than a survey.

That being said, its unlikely that the stimulus had an effect that would alter the financial information these people were seeing such that they would feel compelled to answer the question in the affirmative or negative. Of course, there is a significant difference between the presence of an effect, and the perception of an effect.

**Honersstodnt**

The bankers can say whatever they want... If Obama did *SOMETHING*... and then *SOMEHOW* the economy recovered, the voters in general will credit the recovery to the president.

**WarOne**

I counter the Federal stimulus helped:

It pushed the right closer to winning the next cycle of elections and spent hundreds of millions of dollars in tax payer money for a result that will be bitterly contested by all sides of the political spectrum until FDR becomes the next Hitler in most historian's minds.

Pointlessly flamey picture removed.

**sebster**

Heh, I see the GOP has moved from ‘we’re looking at a crazy long recession and your stimulus won’t help’ to ‘there might be economic recovery but it wasn’t because of the stimulus’

Or are you all sticking by that double dip stuff?

In other news, there’s no argument the stimulus wasn’t as efficient as it could have been. Too little was spent on infrastructure projects – which achieves the greatest stimulus for every dollar spent, and too much on direct stimulus of business, which still has an effect but is much reduced*. That’s a product of the level of influence big business has with both parties, and is a real problem for the US going forward.

*There were also the tax cuts, which have the poorest level of effect, but no government is ever going to get a stimulus bill passed without including some direct return to the voters, that’s just a political reality. There’s also the argument that direct cash in hand, while giving the least stimulus at least does it quickly, important when you’re looking at a sudden supply shock like the GFC.

**Mannahnin**

sebster wrote:Heh, I see the GOP has moved from ‘we’re looking at a crazy long recession and your stimulus won’t help’ to ‘there might be economic recovery but it wasn’t because of the stimulus’

Or are you all sticking by that double dip stuff?

[/echo]

**sexiest_hero**

+1 ^^

Things wouldn't supposed to start improving till 2011.
Remind me how the GOP will make a jobs bill helping the jobs market while "having no government involvement in the market"? Don't do anything and hopefully it will fix itself, doen't work for anything.

**ShivanAngel**

Anyone else come into this thread expecting something else?

**Soladrin**

I sure as hell did... "Whistle"

**Frazzled**

Mannahnin wrote:
sebster wrote:Heh, I see the GOP has moved from ‘we’re looking at a crazy long recession and your stimulus won’t help’ to ‘there might be economic recovery but it wasn’t because of the stimulus’

Or are you all sticking by that double dip stuff?

[/echo]

Current projections are maybe 2% growth this year. That doesn't even keep up with inflation. Yea I'm sticking to my W recession. If I am wrong then I am ecstatic.

**gorgon**

I hope that's just talk on your part and that you're not managing your portfolio with another recession in mind. Because that's some serious opportunity risk, especially given what the markets are doing and how earnings are coming in.

**Frazzled**

My portfolio is longer term than six months. Thanks though.

I'd love to be wrong. It would be in my interest to be wrong.

**dogma**

Frazzled wrote:
Current projections are maybe 2% growth this year. That doesn't even keep up with inflation. Yea I'm sticking to my W recession. If I am wrong then I am ecstatic.

Depends on the projections you look at. I've seen 1%, I've seen 5.5%, and I've even seen -3%.

Similarly, I've seen inflation forecasts that place the rate under 2% over most of the year.

**sebster**

Frazzled wrote:Current projections are maybe 2% growth this year. That doesn't even keep up with inflation. Yea I'm sticking to my W recession. If I am wrong then I am ecstatic.

US growth projections aren't given in real terms? You use growth with inflation in the figure? What the hell kind of country are you running?

**Tim the Biovore**

All of our stimulus went to the Black Saturday bush fire victims, so it did help a bit.

**gorgon**

US GDP grew 3.2% in the first quarter, driven by increased consumer spending. That's a slower rate than in the previous two quarters, but it's still solid growth. I don't think moderate growth like this will convince the Fed to do any tightening any time soon, so that might be good news for equity markets.

Automatically Appended Next Post:

dogma wrote:
Frazzled wrote:
Current projections are maybe 2% growth this year. That doesn't even keep up with inflation. Yea I'm sticking to my W recession. If I am wrong then I am ecstatic.

Depends on the projections you look at. I've seen 1%, I've seen 5.5%, and I've even seen -3%.

Similarly, I've seen inflation forecasts that place the rate under 2% over most of the year.

The source is always a key factor. I bet PIMCO is out telling people to be very, very cautious going forward, LOL. Meanwhile small cap managers are likely spouting that the economy is back and better than ever...

**Mattlov**

sebster wrote:
Frazzled wrote:Current projections are maybe 2% growth this year. That doesn't even keep up with inflation. Yea I'm sticking to my W recession. If I am wrong then I am ecstatic.

US growth projections aren't given in real terms? You use growth with inflation in the figure? What the hell kind of country are you running?

We do percentages because most people can't really comprehend the mind-bogglingly high numbers of US production, taxes, and earnings across the board. It really is simpler to start with a base "rounded" number of the numbers at hand, then work with small percentages.

**Skarboy**

The stimulus had no appreciable effect on my line of work (architecture/engineering). The money that was spent went towards keeping agency staff employed, not consultants, and the Federal money was caught up in a logjam because there weren't enough trained contracting officers in the system to distribute the money through the Fed's red-tape littered contracting process. It was and is a joke; millions REMAIN tied up in the system with no clear direction. Some roads got paved so some contractors got money, but even then it was mostly City/County/State crews, not private sector. It was supposed to go into "shovel-ready" projects already on the capital improvement plans, but mostly it was a lot of federally-subsidized CYA. The stimulus could have helped stave off layoffs, if the money hit firms like mine, but the management and distribution was typical government bureaucratic B.S. and cost real people their jobs.

**Kilkrazy**

Apparently a lot of people can comprehend the mind-bogglingly huge US national debt. There's a ticker of it in Times Square.

**dogma**

gorgon wrote:
The source is always a key factor. I bet PIMCO is out telling people to be very, very cautious going forward, LOL. Meanwhile small cap managers are likely spouting that the economy is back and better than ever...

Yeah, that's certainly true. Whenever I need to produce a growth projection for a paper I usually produce one of my own, and then place it into a matrix with other projections; including mean, median, and adjusted mode for the set. It always struck me as lazy, or misleading to offer a single, specific number and call it good.

**gorgon**

IMO, a very real problem in the financial media is that they'll run with opinions and numbers from people that obviously have an agenda. The media knows what's up, and so do the educated investors. The problem is the small investor who may not understand that X manager heads a bond fund and therefore would have a personal financial incentive to give a bearish forecast.

Some of this is likely created by umpteen financial news outlets covering finance 24/7 and not having enough real news to cover. So someone makes a proclamation and they run with it to fill time/space and don't put it in enough context for the uneducated investor.

If I didn't already have my M.A., I'd consider doing my thesis on whether the level and type of coverage from the financial media has contributed to increased market volatility in the past two decades. My hypothesis is that it's one of a number of factors (many more small investors managing their own money may be a more significant cause), but definitely a factor.

**dogma**

gorgon wrote:IMO, a very real problem in the financial media is that they'll run with opinions and numbers from people that obviously have an agenda. The media knows what's up, and so do the educated investors. The problem is the small investor who may not understand that X manager heads a bond fund and therefore would have a personal financial incentive to give a bearish forecast.

Some of this is likely created by umpteen financial news outlets covering finance 24/7 and not having enough real news to cover. So someone makes a proclamation and they run with it to fill time/space and don't put it in enough context for the uneducated investor.

I agree completely. What's worse in my eyes is that no financial professional worth his salt would stake his future on a single number, so the proliferation of simplistic 'advice' certainly has the potential to be consciously manipulative. It may not be quite so calculated as deliberate marketing, though I wouldn't be surprised if it were, but the profit motive for the decision is certainly there.

And its not just financial professionals. Lord knows that news agencies aren't above engineering perception for their own profit.

gorgon wrote:
If I didn't already have my M.A., I'd consider doing my thesis on whether the level and type of coverage from the financial media has contributed to increased market volatility in the past two decades. My hypothesis is that it's one of a number of factors (many more small investors managing their own money may be a more significant cause), but definitely a factor.

I have a couple of friends working on that right now, and that seems to be the general consensus of their research.