The "success" of the Obama Stimulus Plan

Reporting from Bloomberg's Rich Miller and Matthew Benjamin on the impact of the Obama Stimulus Plan:

The kick to consumer spending from the package has also proven smaller than economists expected. Retail sales fell for the second straight month in April, dropping 0.4 percent.

Economists surveyed by Bloomberg had been expecting sales to remain steady, in part because the tax cuts in the stimulus plan began to show up in April paychecks via reduced withholding.

If consumer spending remains weak through the third quarter, “that would postpone the recovery into next year,” says Allen Sinai, chief economist at Decision Economics in New York.

For me, this stirs memories of Bush's $168 billion / $600 check stimulus plan that had little impact on the economy last year. I recall the conclusion being that it did little more than stall the recession. So while the recession officially start in late 2007, there was a tiny blip in spending in Q2 '08. As a result, the recession was masked just enough during that quarter to make it difficult to see the true extent of the recession until after the September 19, 2008 bailout was announced.

Personally, I don't see how $787 billion over a couple years will have a bigger impact than $168 billion being delivered in $600 checks over the course of a month.

Oh well. Going forward we'll at least have the Chinese to give us direction!

Tim White