Fiscal stimulus in a picture

By Prieur du Plessis, on March 5th, 2009 posted in: Economy, Investment

A picture is worth a thousand words, especially when it comes to the US Congressional Budget Office’s latest estimate of the impact of the American Recovery and Reinvestment Act (ARRA) of 2009 on the economy.

Is the optimism reflected in the graph perhaps too encouraging?

As an aside, Tom Toles (The Washington Post) has his own ideas regarding the shape of things to come.

Sources:
Congressional Budget Office (hat tip: Asha Bangalore, Northern Trust – Daily Global Commentary, March 3, 2009).

Tom Toles, The Washington Post, March 4, 2009.

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Henry Jasen

March 5, 2009 at 4:16 pm

The low ARRA projection seems quite reasonable. The government comes in an absorbs SOME of the slack in the slump. We pay for this by having a lower top end in the recovery. Some may be willing to accept more of a bust to get a bigger boom, but I imagine that most people (not necessarily readers of this post) would prefer less of a slump and a somewhat lower peak.

Frank W

March 6, 2009 at 3:50 am

Am I missing something here? The American taxpayer is going to be lumbered with trillions of dollars of debt in order to raise the GDP low point, but the economy will not emerge from true recession any earlier than if there were no stimulus. And even then, we will still be in a growth recession. Is that the story or am I missing something?