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Monthly Archives: July 2009

Fiscal Stimulus Finally at Work?

Last week, the Fed’s policy making arm the Federal Market Committee (FOMC) said that the economy was getting better. Those comments were supported by another week of better than expected economic data. Although the FOMC didnt say so, some of the improvement in the economy can be attributed to the $787 billion fiscal package that was enacted in February 2009. According to Recovery.gov, the website set up by the Federal government to allow taxpayers to track the impact of the fiscal stimulus, only about $53 billion of $787 billion has paid out as of June 19. The bill put into place $250 billion in direct aid to individuals and states and $200 billion to improve the nation’s infrastructure (alongside roughly $300 billion in tax cuts), suggesting that there is still close to $400 billion remaining to be spent on infrastructure projects and aid to states. In last week’s data, the impact of the stimulus package was seen in both the May personal income and spending report and the May durable goods orders report. On the other hand, the weekly jobless claimes data suggested that the massive aid to states in the bill was not enough to save jobs in the public education sector, or at least not yet. But with another $400 billion still to be spent, the economy is likely to continue to feel the impact of the fiscal stimulus plan well into 2010 and beyond.

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