Growth In Stimulus, Ultimate Measuring Stick Of All Things Good

As mentioned in the last post on, 2009 American Recovery and Reinvestment Act  "What the Stimulus Meant For Jobs", shortly after exceptional measures took effect job loss peaked and the US economy began adding jobs.

U.S. GDP Growth Took Off After Stimulus

As mentioned in other blogs, the U.S. has done much much better than the Eurozone after the global financial debt crisis.  Not in small part because U.S. was focused on stimulating the economy while Europe was more obsessed with meeting debt to GDP ratios.  Even though cutting public spending during economic downturns (rapid de-leveraging) adds to the budget deficits.

Growth is the single strongest factor that eliminates high net sovereign debt.

Tax revenues drop and social safety net spending increases during a prolonged cyclical economic decline. Tax revenues tend to increase during economic expansion. Inversely, budget deficits skyrocket during a financial crisis… a crisis of weak GDP growth.

Drop Unemployment AND Increase GDP

The Obama administration was focused on reducing unemployment and increasing economic output simultaneously.  The chart below illustrates the beginning of the stimulus in 2009 and the abrupt turnaround in GDP growth...  quite effective!

Some may argue that the economy over-reacted like a rubber band and snapped back.  Some GDP correction might naturally happen but not to this degree or within such a short time!  At the time, there was no end in sight and every day the economy was one step from the edge of the fiscal Armageddon.

The short-term to mid-term effectiveness of the 2009 American Recovery and Reinvestment Act -Stimulus - is obvious!  Quantitative Easing by the Fed may have also had an impact... this QE topic is for another post.

Long Term Economic Trajectory, Sharp Increase

According to Michael Grabell, over 41,000 miles of new roads will be paved, increased, or enhanced.  Low-income houses will be weatherized. 3.000 schools in rural areas will be connected to high-speed internet services.

Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/how_the_stimulus_failed_97RlMvRHLSLCiCf8op1iEM#ixzz26IbA7hwH

The video below is from Michael Grabell interviewed by Jared Bernstein:

Grabell highlights the way the Stimulus bill 'as is' will improve education, healthcare, unemployment, and green energy industry.  Energy in the U.S. would be forever changed.  The boldest plan to actually make the U.S. energy independent.

Clean Energy Stimulus Program

The Stimulus package revitalized and forever changed the trajectory of clean energy industry in the US...

Obama administration used federal funds of $90 billion to leverage another $100 billion of private investments.  Or...  $90 billion in public money drew $100 billion in private sector investor.  Wind power is on it's way to being doubled.  Natural gas incentives enacted...

 While the Stimulus program worked in many ways, it was planned poorly from a political standpoint.  The effects were to short lived as well.

More on Grabell's book soon...