News Markets Media

USA | Europe | Asia | World| Stocks | Commodities

Home News USA US Economic Stimulus Comes Up Short, Say Turnaround Experts


US Economic Stimulus Comes Up Short, Say Turnaround Experts
added: 2009-02-26

Infrastructure spending and business tax benefits contained in the $787 billion economic stimulus plan are most likely to kick start the economy, but not for several months, according to turnaround experts.

In the Turnaround Management Association's poll of 33 Opinion Leaders, 42 percent agreed that spending on infrastructure and technology improvements would do the most good for the economy in the shortest time. Another 30 percent said business tax benefits were the most promising element.

Many said the plan does not go far enough to stimulate the economy because it lacks substantial tax cuts and measures needed to unclog credit so businesses can stay healthy.

"Restoring the flow of credit in tandem with the stimulus package is critical," said TMA Chairman Arthur Perkins, a director with Deloitte Financial Advisory Services LLP in San Francisco. "Many companies need access to credit to provide the liquidity necessary to survive the downturn, while other companies need liquidity to make acquisitions."

Respondents were divided on when the first real impact would occur, with 25 percent optimistically predicting it will take six to nine months for improved economic indicators and a more pessimistic 25 percent saying it will take more than a year. Those representing the most frequent response, 34 percent, expect economic improvement within 9 to 12 months.

Overall, respondents gave lower marks to other measures designed to lift the economy:

* 15 percent - Extension of unemployment benefits
* 6 percent - Middle class tax relief
* 3 percent - Either increased state aid or tax relief for first-time homebuyers

While many respondents decried "pork" provisions, a few agreed that thousands left jobless in a cratering economy need a lifeline.

"Almost 2 million jobs lost in the last three months in the U.S. is a catastrophe," said Raymond Neihengen, a turnaround consultant with MorrisAnderson in Chicago. "History shows that significant monetary stimulus from the Federal Reserve has a considerable lag time before having an effect. Having this safety net [of extended unemployment benefits] should somewhat mitigate the impact of these horrific job losses."


Source: PR Newswire

Privacy policy . Copyright . Contact .