Out of Control Policy Blog

Stimulus MIA in Second Quarter Growth Estimates

The stimulus didn't show up in the second quarter of 2009 (April-June) according to an assessment by University of Chicago economist Casey Mulligan on the New York Times blog Economix. Despite promises the stimulus package passed last winter would begin to show up immediately in economic numbers, federa and state government spending is still effecitvely "missing in action." As Prof. Mulligan notes:

"We were told that the stimulus law would invigorate the economy by spending on federal nondefense programs and helping state and local governments maintain and grow their public services. Stimulus advocates point to the fact that these spending categories indeed grew from the first to the second quarter, as shown in the chart by the fact that those two bars point upward. (Perhaps they believe that tax cuts and unemployment insurance have important effects, but these are not separate G.D.P. categories — they are included in whatever category the recipient spends them).

"However, the chart also shows that these types of purchases were trivial. Real federal nondefense purchases increased by a mere $4 per American, while state and local government purchases increased by a mere $8 per person. Real defense purchases increased by $17 per person, which seems large when compared to the other government purchase categories, but is trivial by any other measure."

The blog post is based on data released by the U.S. Bureau of Economic Analysis (BEA) for the second quarter Gross Domestic Product, or the value of goods and services produced in the U.S. from April to June compared to previous quarter.

More on Reason Foundation's writings on the stimulus can be found here.

Samuel Staley is Research Fellow


« Pembroke Pines, FL Privatizes Adult… | Main | California's Fiscal Death Spiral: Is… »




Out of Control Policy Archives