The consensus among mainstream economists is that another fiscal stimulus package isn’t needed yet.
The New York Times editorial page disagrees.
The majority view is that the impact of February’s $787 billion package hasn’t been fully felt yet, and the economy is headed for growth in the second half of this year in any case.
But The Times says, “The consensus among economists is that the recession is over, and, technically, the herd is probably right. Corporate profitability has been boosted by job cuts, pay cuts and a drive to restock depleted inventories. Immense federal stimulus has jolted the economy.”
But what happens next, The Times asks.
“The economy is going to need more government support, or it is bound to be very weak for a very long time — and vulnerable to a relapse into recession.”
The problems include growing joblessness, an increase in foreclosures, continued bank failures and budget crises at the state and local levels.
“Yet Washington is not providing a coherent plan for effective stimulus.”
Of course there is a reason for that. Treasury Secretary Tim Geithner told CNBC that a second stimulus package isn’t needed.
The first stimulus and the bank bailouts have worked to stabilize the economy, he said.
And a stealth stimulus package is being adopted anyway, in pieces, CNNMoney.com points out. These measures, including extension of unemployment benefits and a job creation tax credit, could total $84 billion, it estimates.
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