Consumers Aren’t Confident, Yet

"I once thought that spending money was the government’s strong suit. But as of October 20, only $120 billion of the $290 billion available so far from the stimulus package has been spent. Despite the early rhetorical emphasis on shovel-ready projects, the Department of Health and Human Services, the Department of Labor, and the Department of Education accounted for two-thirds of the total spent.

The Department of Transportation, a source of spending that is likely to be rich in shovels, has $30 billion available but has only managed to spend $4 billion. So perhaps it is not surprising that construction workers and manufacturing workers (who make up half of the job losses since the beginning of the recession) are struggling to find jobs.

The good news is that third quarter G.D.P. is up. But has government spending (or the tax cuts in the stimulus package) caused the growth or would it have occurred anyway?

It’s hard to say, but there are logical reasons to be skeptical of the impact of the stimulus. If the stimulus increases spending on medical research, increasing the demand for medical researchers, the main impact will be to increase salaries rather than create new jobs..."

 [Read the full blog post from Russell Roberts]