By Kelley Atherton
At first, news about whether the economic stimulus checks that started rolling out in April were making a dent in the economy was not good.
Now economists are saying that consumers have been spending more in the last few months. However, the song remains the samethe economy is still in shambles.
The stock market took another plunge this week, and the price of a barrel of oil is creeping toward $200.
The whole idea behind the Economic Stimulus Act of 2008 is to put $152 billion into the hands of Americans to go out and spend. This would generate growth in the economy.
In April, growth was minimal. Consumer spending only rose about 0.2 percent and personal incomes gained about the same. This means that people were making slightly more money and spending it.
This small jump is being credited to the stimulus checks. The checks are expected to add $59 billion to the gross domestic product this year and $36 billion in 2009.
Not everyone is convinced though. Most economists are saying that this is only a band-aid to a huge wound. It might take more stimulus rebates to get the economy moving again. However, that only puts the government in more mounting debt.
"The rebates may be helping the economy, but the stimulus they are providing is certainly too small to make a real difference," said Robert J. Shiller in a column for the New York Times. "More will be needed, perhaps much more, before the economy is truly on safe ground."
Our economy is comparable to the Depression of the 1930s and especially in the late 1970s, when the country had a similar gas crisis.
Consumers are still afraid to spend money. Debt, mortgage payments and gas prices are all causing people to clutch their pocketbooks.
The Reuters/University of Michigan survey of consumer sentiment dropped for the fourth straight month in May. Consumers' ill feelings toward spending haven't been this bad in 28 years.
The good news is that economic analysts are speculating that two-thirds of the stimulus checks will be put back into the market.
In May, consumer spending rose 0.4 percent. Without adjusting that number for inflation, it would be 0.8 percent in one month.
And that's only after $50 billion in stimulus checks had been sent out. People will still be getting their checks well into July.
"You pump out $50 billion in a couple months' time, and there ought to be some noticeable impact," Joshua Shapiro, the domestic economist for the research firm MFR, said to The New York Times.
"The 0.4 percent increase was not a huge one if you think about how much money was pumped out."
Whether it saves our economy or not, one thing that can be said about the Economic Stimulus Act of 2008 is how quickly Democrats and Republicans were able to debate and pass the bill. It was a true example of bipartisanship.
I wonder though, how we will look back on this time. When my children are studying this in their American government or history class, what will they think about the stimulus? Will it be recalled as a great idea that helped push our country back into prosperity, or will it be considered an idiotic solution to a problem that can't be easily solved?
It unfortunately will take several years for America to be at the top of its economic game again.