The economy just had its worst quarter in 26 years.
What that means is that it got smaller by $113 billion.
Ideally we'd like it to not just get bigger, but to get about 0.5% bigger each quarter - that's a minimum value on what it takes us to feel good. That translates to about $58 billion.
The government's numbers are artificially precise, so let's round the -113 minus the +58 and say we're about $200 billion short of where we need to be this quarter.
Congress is in the process of passing a stimulus package 4 times that size, and the Obama administration envisions the total effect to be about 6 times that size.
They either:
- Think we're in for six more quarters of this, or
- They're spending extra of other people's money just because they can.
The reality may be worse. Two hundred billion is in the range of what the stimulus package claims will be spent in 2009. So the numbers are just about right for what we've already had, without much account for what is yet to come. Yet, the stimulus package also includes a lot of spending in future years, for which we can forecast very little.
So, it's completely possible that they are underspending now and overspending in the future.
