- A fiscal stimulus package has only a limited impact if people believe that tax will go back up, and the current situation is certain fertile for such beliefs
- Imports are likely to absorb a portion of the (small) increase in consumption. China will be grateful.
- Is the situation really so dire? Most indicators are still robust. There is no reason to panic. Obviously, if journalists react to a tiny 17,000 unit reduction in payrolls by claiming "Employment drops in a pink slip blizzard," it does not help.
- Never have politicians managed to spend $150,000,000,000 with so little scrutiny, discussion and consultation of experts. Well, maybe with the Iraq war, but that is a different story.
- Lack of consumption is certainly not the problem in the US, it is rather the lack of savings, with currently a negative aggregate savings rate. One should penalize consumption, not encourage it!
Monday, February 4, 2008
In a previous post, I already detailed how (possibly) little impact on consumption a stimulus package may have. Economists tend to agree that the stimulus package is not the best idea out there, to give you an understatement, but politicians do not seem to listen to economists. That is their prerogative, but let me add a few arguments that they should be listening to, including some repeats.