How Much Did We Grow Absent Stimulus

Zero

Here’s a wet blanket to start off your weekend.

According the the WSJ, Goldman Sachs economists have concluded that there would have been no growth, zero without the stimulus program.

Estimates of how much the government’s spending is actually stimulating growth vary wildly — some economists contend it has no net effect at all. But if you believe the economists atGoldman Sachs, who have spent a lot of time poring over the details, the effect is quite significant: about two percentage points of annualized growth in both this quarter and the last. Indeed, if one subtracts that stimulus effect and the boost from changing inventories — also a temporary factor — there’s been no recovery at all. Growth in the first and second quarters of 2010 would be zero.

Now, if you want to adopt the glass half full theory, you would argue that is exactly what should have happened. The economy was flat on its back and stimulus basically stimulated it. Kick started things so to speak. As the article points out, the 290,000 jobs created in April is an indicator that the markets are responding to the stimulus and starting to grow on their own.

We had better hope so since there isn’t a lot of money left to spread around.

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