Today, the Washington Post published an insightful article highlighting how temporary government spending intended to “stimulate” the economy may only artificially and temporarily prop up industries and fail to produce lasting results.
Noting that “a sustained rebound may be elusive,” the article cites significant private sector dependence on government economic spending such as cash for clunkers, temporary homebuyer credits, and “stimulus” funding:
The fragile economic recovery has relied heavily on government stimulus spending, but new data show that as the money runs out, a sustained rebound may be elusive.
The dramatic decline in sales reported Thursday by the Big Three automakers suggested the extent to which the stimulus act has propped up the economy. The government's wildly popular "Cash for Clunkers" program drove consumer spending to its highest level in eight years in August. But after it ended, so did the growth in auto sales.
General Motors' sales plunged 36 percent in September compared with August. Ford plummeted 37 percent. Chrysler dove 33 percent.
Other economic data released Thursday showed that the deep wounds of the recession have yet to heal. Weekly jobless claims rose more than expected, a sign that businesses are still concerned about the future. The monthly unemployment rate, scheduled for release Friday, is expected to rise, albeit at a slower rate. Consumer loan delinquencies remain at record highs, and manufacturing growth has slowed. [. . . ]
But economists' bigger concern is that many Americans are out of work, and their ranks continue to increase. That puts them in poor position to pay off the mounds of debt accumulated during the boom times.