Writing in the Wall Street Journal this morning, economists John Cogan, John Taylor, and Volker Wieland explain that the data shows that government transfers, rebates, and spending did not increase consumption. In other words, the stimulus is not stimulating the economy. They write:
Incoming data will reveal more in coming months, but the data available so far tell us that the government transfers and rebates have not stimulated consumption at all, and that the resilience of the private sector following the fall 2008 panic–not the fiscal stimulus program–deserves the lion’s share of the credit for the impressive growth improvement from the first to the second quarter. As the economic recovery takes hold, it is important to continue assessing the role played by the stimulus package and other factors. These assessments can be a valuable guide to future policy makers in designing effective policy responses to economic downturns.
They have a chart:
We have seen this chart before. In fact, it looks just like what happened with president Bush’s 2008 stimulus plan. So I guess, it’s worth repeating it again: Stimulus spending never works.