Although the National Bureau of Economic Research tells us that the recession ended in July 2009, the U.S. economy nonetheless remains in a period of sluggish and uncertain growth.  Consumer confidence remains low, and, with a pending “fiscal cliff,” the “Recession Probability Index” jumped from about 2 to nearly 20 in August.  Unemployment remains exceptionally high.  As we discussed in our paper Can Government Spending Get America Working Again? An Empirical Investigation, the government’s effort to jump start the economy with spending has failed (and will continue to do so), and recovery is likely to depend on the expansion of private sector investment.  Yet, private …
Read more

This week, noted economist Arthur Laffer wrote an interesting piece in the Wall Street Journal entitled The Real “Stimulus” Record.  In this piece, Dr. Laffer argues that before policymakers in Washington again try yet another round of stimulus spending in an ostensible attempt to mitigate high unemployment and poor growth rates, they should remember that President Obama’s first stimulus package did not exactly meet with great success.  As support for his argument, Dr. Laffer cites the facts that while stimulus spending over the past five years totaled more than $4 trillion, increasing  U.S. Federal government spending from 21.4% to 27.3% of GDP over the 2007 …
Read more

Last week, there was sad story in the Washington Times reporting that the District of Columbia has received more than $855 million in federal economic stimulus funds since 2009, but that this spending had not been shown to produce any significant improvement in the city’s jobs outlook.  As a third-generation Washingtonian, it would be easy for me to blame the failure of federal stimulus to actually do any stimulating on the congenital dysfunction of the D.C. Government.  Instead, I think the lesson learned here is that despite its intentions, government stimulus just isn’t that helpful in creating new private sector jobs regardless of geographic location. …
Read more

Get Adobe Flash player