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Stimulus Report Card

Performance Report [1]Nine months ago, Congress passed and President Obama signed an economic stimulus package totalling $1.8 trillion.  Hastily designed and implemented, the legislation was highly criticized because it was virtually impossible for anyone to have actually read the bill (much less understand it) prior to implementation.  The President himself told us that it was imperative we pass these bills in order to restore economic stability.  Conservatives, especially fiscal conservatives, howled, claiming the bill was inappropriately designed, that the money being spent could not possibly generate economic growth because it would take too long to move through the system, with the added concern of driving up an already astronomical deficit.  The Administration insisted that the spending was necessary to keep unemployment from exceeding 10%.  We were being deceived, and we knew it.

It generally takes about six months for changes in fiscal or monetary policy to be felt throughout the broader economy, so after nine months we should be seeing some signs of economic improvement.  That is, the weekly economic statistics should be trending upward.  Granted, corporate earnings have been stable in the third quarter.  But other than those areas specifically stimulated by the targeted efforts of Congress and the Administration (auto sales via “cash for clunkers” and the $8,000 first-time home buyers tax rebate), the broader economy continues to struggle.

Economic statistics released last week, the week of October 19, indicated the following:

In short, economic growth continues to lag, and without something more substantial, such as reductions in personal income tax rates, will remain weak until we create systemic aggregate demand.  And given where our national budget deficit is, tax cuts are not likely to happen under this administration.  Instead, President Obama is considering how to raise taxes, which will have the effect of discouraging growth further.

Stay tuned, as we continue to monitor our progress.