One of the hottest topics in business these days, right behind whether there is a true economic recovery under way, is whether the $787 million federal stimulus package Congress approved a year ago actually did any good.
Did the American Recovery and Reinvestment Act get the economy moving again? Did it create jobs? Did it stop the financial bleeding and set the country on the way to growth?
Although everyone would like to come up with a definitive answer, a reasonable response to those questions as we look across the economic landscape for the past year, from the movement of job measurements to the movement of goods more directly tied to trade and transportation, is, well, pretty much.
That is, if anyone was expecting a flow of federal dollars in the form of grants, tax cuts and, yes, some ill-considered spending for special interests, would kick-start the foundering U.S. economy into the kind of growth we saw in 2005 to 2007, they must surely be disappointed.
Despite a 5.7 percent increase in GDP in the fourth quarter and more recent reports of resurgent shipping demand out of Asia, there’s a widespread view that the economic growth in recent months is driven largely by the release of pent-up demand. Many transportation operators believe the shipping surge is being fed by retailers restocking depleted inventories, which means companies will cut back their shipping in coming months without more signs that consumers are buying and factories are rushing to make the goods.
Likewise, you’re likely disappointed if you thought the recession and the stimulus package should fuel a new era of infrastructure spending, with the federal government rebuilding highways, ports and even railroad tracks. The stimulus bill did not create new versions of the Tennessee Valley Authority and Works Projects Administration.
But a clear-eyed assessment of the stimulus package suggests it did what it was meant to do by arresting the startling rate of economic decline the country was seeing a year ago and giving businesses and workers desperately needed breathing room.
The stimulus spending was not heavily weighted toward spending on infrastructure as many transportation companies had hoped, but the Associated General Contractors of America last week said $20.6 billion of the money spent has gone to highway projects. Those projects have created nearly 280,000 direct construction jobs, the group said, and highway and road construction spending grew last year even as overall construction spending fell by $100 billion.
“The stimulus is saving construction jobs, driving demand for new equipment and delivering better and more efficient infrastructure for our economy,” AGCA Chief Economist Ken Simonson said.
The economy might have been better served by more spending, or spending targeted in different ways, but there seems little question the U.S. economy is in a better state than it would have been if Congress and the administration had not acted when they did.
The real question now is, with more than $330 million of the stimulus package left to be spent, is there enough there to keep the economy moving until business catches up?