Eight months after President Barack Obama notched his first major initiative as president, the White House is releasing its
first stimulus figures. We look at five key economic problems the American Recovery & Reinvestment Act was supposed to fix -- and assign a grade accordingly.
Real Gross Domestic Product ... F
The US Real GDP (the output of goods and services produced by labor and property) decreased .7 percent from the first to second quarter of 2009. In the first quarter, the Real GDP decreased 6.4 percent. According to the
Bureau of Economic Analysis, the GDP decline reflects drops in "private inventory investment, nonresidential fixed investment, residential fixed investment, personal consumption expenditures (PCE), and export ..." The spending package didn't do enough to offset these declines, which is one reason why the overall GDP continues to sink, year-to-year. The Department of Commerce, which was allocated nearly $8 billion, has spent less than half a billion since February.
Consumer & Housing Prices … F
The stimulus package was supposed to increase all areas of the economy, and consumer pricing is one of the key economic indicators. As of September 2009, overall consumer prices were down 1.3 percent from September 2008. Leading the way, of course, were housing costs, which continue to trend downward, despite occasional spikes here and there. The housing cost index reflects a dip in residential vacancies and lower hotel costs across the country. Responding to the worst housing disaster in more than a decade, the Department of Housing and Urban Development, which received $13.7 billion to assist in the recovery, has spent just 11.18 percent of that money, or $1.5 billion, according to
Republica, a stimulus tracking web site.
Job Growth … F
Remember the many jobs the stimulus package was going to create for the so-called “shovel-ready” projects that were just waiting for workers to be hired? The stimulus package has done
very little to move those projects forward due in large part to a complete lack of disbursement oversight. For example, the stimulus money sent to Pennsylvania -- supposedly for job creation -- was instead used to fill a yawning gap in the state budget. The Keystone State
still hasn’t passed its budget and the stimulus money continues to rest in a quiet bank vault somewhere, doing nothing to help anybody. Even the president is aware of the failure. Days before releasing the number of jobs directly funded by the stimulus, the White House was in full
spin-mode.
Small Business Credit … F
Although the Dow closed above 10,000 for the first time in a year and the banking industry recently reported record profits, small business owners
still can’t get loans. Many small business owners see profit potential with the upcoming holiday season, but without loans for extra staff and other investments, much of those profits will go unrealized. Obama and Congressional Democrats are directly responsible for this since they failed to make stimulus money for banks contingent upon consumer lending. Meanwhile, these small businesses have no place to go to get their loans, since the Small Business Administration received one of the smallest allotments from the stimulus package -- $730 million ... of which just 16 percent has been spent.
Unemployment … D+
Although unemployment continues its downward trend, it decline is much slower than Democrats would have had us believe eight months ago. In fact, the
Bureau of Labor & Statistics reports that
employment continues to decline, while
unemployment continues to increase (9.8 percent). This, despite Obama’s claim in February that unemployment would not rise above 8 percent with successful passage of the stimulus package. Fed Chairman Ben Bernanke
predicts that unemployment will stay above 9 percent through 2010.
OVERALL GRADE ... D-
The slight improvement in unemployment was enough to give the $787 billion stimulus package -- which is expected to reach more than a trillion dollars after interest enters the picture -- a passing grade. Much more needs to be done, however, before the American Recovery and Reinvestment Act can be considered a success.
