It is hard to see the recovery coming from this chart (see below). Will the Stimulus funds have an effect this summer?
Update: Paul Krugman calls for a second round of stimulus, warning that we could still be headed for another Depression. The states are about to swing the axe and make enormous budget cuts, which will mean even more job losses and less money flowing through the economy. A lost decade due to deflation is a real possibility. Krugman thinks it’s time for decisive action by President Obama:
All of this is depressingly familiar to anyone who has studied economic policy in the 1930s. Once again a Democratic president has pushed through job-creation policies that will mitigate the slump but aren’t aggressive enough to produce a full recovery. Once again much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.
So have we failed to learn from history, and are we, therefore, doomed to repeat it? Not necessarily — but it’s up to the president and his economic team to ensure that things are different this time. President Obama and his officials need to ramp up their efforts, starting with a plan to make the stimulus bigger.
-CDP
(Chart is from Calculated Risk, hat tip to Daily Dish)
