I hope you're right ZS, but I don't see the economy pulling up before the effects of a trillion dollars' worth of "stimulus" hit the money supply.
What we have here is a textbook recipe for stagflation, now it is all about the timing. If the economy recovers before the inflation caused by rampant federal printing/borrowing, we might stave off severe recession for a bit longer. However, if the market responds to the increased money supply first (in the form of higher prices), then I'm afraid we're in for a lot more abuse.
The lower fuel prices we are enjoying may help, as some economists theorize, but they aren't going to offset the inflationary damage.
And that's to say nothing of the long-term effects of this kind of federal spending.
This one single bill has managed to spend more money than the entire Iraq War.
People can debate economic theory until they are blue in the face but every time the U.S. government has intervened on a large scale they have made the economic situation worse overall, rather than better.
As it is, Social Security, Medicaid, and interest on the national debt account for more than half of the budget. And the budget already runs at a defecit.
Coming along and dumping trillion on the debt and an additional 200-900 billion in expenses a year(estimates vary, a visit to
www.gpo.gov shows wildy enthusiastic predictions for future defecit) is not going to help the situation.
The economy desperately needs time to catch up with the money supply and back it with actual production. Obama's administration is attempting to jump-start the process with directed spending, heedless of the catastrophic failures that similar measures have yielded in the past.
It's hard to say this without being offensive to my leftist colleagues here, but one of the things that continually pisses me off about the Democrats' economic policies is that they always think they have the damn answer. Then they fail, and then they come right back and say "our policy is good, it just needs a little more tweaking" and they just shrug off the damage they've done. And yes there are Republicans guilty of this too, make no mistake.
Obama has demonstrated the willingness to at least say that he wants to cut programs (150, I think, in the last budget committee report) but his actions say that he's going to replace them with more spending.
Even if he was some economic genius that could figure a centralized solution to the nation's woes, there are too many factors working against effective implementation of such legislation.
I don't see a bright outlook. The clouds may break here and there, for a bit, but the storm hasn't even begun.