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Stimulus Exit Strategy is too Early

With the one year anniversary of the Obama Economic Stimulus Package behind us, and the situation is similar for various countries around the world, the question as been ask about a premature stimulus program exit.

While some countries are slowly exiting from stimulus measures, the finance ministers of the G7 group as decided to maintain stimulus measures to help sustain a viable economic condition. This is clearly a strong sign of the involvement of our government in the success of getting out this economic downfall. However, it shows that the economy is not as good as it should be and as they would have expected it to be.

The federal bank as however chosen to hike the base rate for emergency loan from 0.5% to 0.75%, sometimes last week. This 0.25% increase came to a surprise for many market specialists even tough the fed was clearly saying they would take some measures to remove the stimulus aid from the financial system. This, comes as a contradiction with the G7 finance minister proposition of keeping the stimulus measures.

Also, while the G7 proposition of keeping stimulus measures alive as been taken by the Obama administration as part of the G7 group, the opponents to the stimulus package are claiming that the February 2009 stimulus package as not done much to help the economy. The principal element to their claims is the double digit unemployment rate numbers that wont go down. However, the opponents of the stimulus are in majority republicans who are obviously making it about a political game and partisanship rather then seeing the real numbers. Last week, some researchers have provided a figure of 1.6 millions jobs saved and are expecting the stimulus effects to be near 2.5 millions jobs saves in the long run. While the Obama administration generous numbers are near 3.5 millions, the fact is that the stimulus as saved or created some jobs.

A recent survey by the National Association of Business Economist as revealed that they expect the economic recovery to remain on track. While they mention they see some improvement in the economy they are also stating that it is hard to grasp the future results of these economic stimulus measures.

The spending of the 2009 economic stimulus package plan is elaborated till 2018, with 2010 and 2011 being the peak spending years. Many of the projects have not been awarded yet and some are still working on the preparation of these. Take the broadband internet measures that are still in the early process of distribution, for example.

For many peoples, they haven’t seen any real effects of the stimulus money and are still struggling to get by without a job. These economic hard times are still very present for a big portion of the population and we wonder if the stimulus exit measures are not a little too early in the game to call it a success.

Tags: bank, finance, government, jobs, loan, market, money, Stimulus

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