Administration officials say the combination of tax rebates, a sharp drop in interest rates and minimal inflation should provide a powerful stimulus to consumer spending and business investment that will help the American economy turn around later this year or early next year.
Mr. Bush has also made a $1.6 billion tax cut the centerpiece of his economic plan, while agreeing to speed up some tax relief to act as a near-term stimulus to consumer spending.
This would reduce the stimulus to consumer spending from households releasing some of their wealth by borrowing against their properties.The Bank's new forecasts make Gordon Brown's look even more over-optimistic.
But beyond that, "we just don't see any near-term stimulus to boost consumer spending anytime soon," he said.
"I think it will help be a stimulus to preserve consumer spending and prolong it, particularly as we get into the holiday season".
So what the country needs now is not temporary stimulus measures that increase consumer spending but sustained stimulus that increases investment spending over several years.
Right now, unemployment is mainly the result of what economists call cyclical factors: during the recession, demand plummeted, and during the recovery consumer spending, government stimulus, and exports haven't been sufficient to make up the difference.
In fact, technology has underperformed the broader market for most of the last six years, but now they are not quite as affected from current downturn as other companies, and many may actually benefit from the stimulus package as well (more consumer spending, government contracts etc).. Ghodsi: There is opportunity.
Echoing Mr. Bush, Mr. Paulson is also arguing that the distribution of stimulus checks will help to bolster consumer spending.
With lavish consumer spending providing the stimulus, the American economy turned in another very robust quarter, the government reported yesterday, as new evidence emerged that prosperity is finally pushing up labor costs, raising fears of higher inflation.
