For all the criticism about massive U.S. stimulus spending ‘not working’, and warnings of an imminent economic downturn once stimulus is removed, here’s a simple rebuttal — most of the administration’s stimulus spending hasn’t even hit the economy yet. Thus it’s absurdly premature to judge its impact or fear its withdrawal.
As shown by the pie chart below, only 1/3 of the U.S. recovery stimulus from the The American Recovery and Reinvestment Act of 2009 has been used so far. The amount spent and amounting from tax cuts is only 35%, in blue below, according to stimulus watchdog Propublica.
Almost 2/3 of the stimulus is still on the way, as shown below in shades of red.
The stimulus wasn’t meant to be entirely spent in 2009, but rather over the course of multiple years. Thus it is completely disingenuous to decry the total stimulus cost in relation to the current economic rebound — since this stimulus program has just begun. Wait to see it actually hit.
For investors, this means that the U.S. economy won’t be forced off of life support any time soon. Stimulus is far from surefire, but the wind will remain behind your back in 2010. Note the stimulus even includes massive amounts of tax cuts for those who think markets know better than government in these matters:
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