Stimulus Package Part Deux?
Can another economic jolt be far behind?
A smattering of news outlets suggest that while you were pondering the best way to spend your weekend, President Bush may have been considering other measures aimed at stimulating the struggling U.S. economy.
On Friday the president gave a speech about current economic conditions that, according to CNBC, "did not unveil any new proposals, nor even hint whether he believes any are necessary."
However, the May unemployment numbers also released this past Friday, coupled with the aforementioned news reports, have fueled speculation that new stimulus could be around the bend.
The word "new" is operative; a $168 billion stimulus program approved earlier this year is still being doled out (individuals who haven't already, should be receiving rebate checks over the next few months).
So will the President go ahead with another shot to the arm? I think so, but I wouldn't expect anything in the next couple of months. Here's why:
First, President Bush thinks the current stimulus package is working -- or may work -- to stave off a recession. We got a glimpse of this when in the above noted speech he said, "We're beginning to see signs that the stimulus may be working."
The statement seems to suggest that, at the very least, he'll wait to see data on how the stimulus money is being spent before reaching a final conclusion. In some cases they got a head start, but the IRS website notes rebates will be mailed out through the first part of July. My guess is Mr. Bush won't make any decisions until the latter part of July or the beginning of August - at the earliest.
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Another reason why a stimulus package sequel could take a while: The president is having a tough enough time jawboning Congress to make his tax cuts permanent. If he were to try to push through another economic program at the same time his odds of success could decrease. Remember, Congress isn't the giving type, nor is it reputed for its multi-tasking abilities.
At least politically, it may make sense to wait. The race between (presumptive nominees)Senators McCain and Obama is just starting to heat up and has many months to go. If President Bush were to table a new stimulus package, he may do so closer to the election when the goodwill it generates with voters could help McCain.
Finally, oil. Crude has soared in recent weeks to over $130 a barrel, which translates to roughly $4 a gallon for gas at filling stations like Mobil (XOM), Shell (RDS-A) and Phillips 66 (COP). It's taking a toll, but there's a good deal of speculation that a pullback is imminent.
It's unclear if Mr. Bush is like-minded, but if he's indeed optimistic about gas prices falling back to Earth, it makes sense to wait and be in a position to better judge the size, scope and necessity of stimulus.
It stands to reason President Bush would be pondering new and different ways to galvanize the economy. It's equally reasonable not to expect any concrete decisions until the late summer.
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