As Economy Recovers, Stimulus Money Continues to Dribble

The U.S. House of Representatives’ Transportation and Infrastructure Committee just released a report detailing the effects of the stimulus money so far. As usual, it’s much ado about nothing.

According to the information received, as of March 31, just 42 days after President Obama signed the Recovery Act, work had begun on 263 highway and transit projects in 30 states. These projects total $1.1 billion and have put more than 1,250 workers back on the job. Another 101 projects worth $100 million are under contract. A total of 1,380 highway and transit projects in 47 states and the District of Columbia, totaling $6.4 billion, had been put out to bid by that date.

Moreover, the state that has experienced the most job stimulus-related job creation is Texas, one of the most economically resilient states with an unemployment rate still well below the national average as of March 2009. The full state-by-state tally by the House T & I committee by state can be found here.

Of course, just because states report these jobs as “created” or “retained” doesn’t mean that’s what they are. They could have been projects that were already waiting in the pipeline. They could also be projects that will add little of value to the economy, so they represent a net drain on the economy at the end of the day.

Meanwhile, the economy appears to be bottoming out. President Obama even hinted at as much at a speech at Georgetown University. His comments echoed the observations of Federal Reserve Board Chairman Ben Bernanke on the same day:

In a separate speech being delivered this afternoon at Morehouse College in Atlanta, Federal Reserve Chairman Ben. S. Bernanke reports “tentative signs that the sharp decline in economic activity may be slowing,” according to the text of his remarks.

Bernanke adds: “A leveling out of economic activity is the first step toward recovery. To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets.”

More tellingly, perhaps, even the homebuilders are forecasting a growing economy by the end of 2009 and into 2010.

We [forecasters at the National Association of Home Builders] expect real GDP to stabilize around mid-year and to post modest (below-trend) growth in the second half of this year.

The GDP recovery should gather momentum during 2010, with above-trend growth emerging by the second quarter. If this pattern materializes, a significant run of self-sustaining above-trend growth will be in store for 2011 and beyond.

Put another way, just as the economy is bottoming out, the stimulus money is barely even a trickle in the economic picture. This is to be expected, as I have discussed elsewhere on this blog (see here and here). Pushing this money out the door is difficult, even if bureaucracies are efficient and don’t face checks and balances inherent in democratic governance. At the end of the day, the private sector brings the economy out of recession through their own independent investments, not government spending or policymakers telling them what they should spend their money on.