With the apparent debt-limit debate now evidently a done deal in Washington, the nation is saved from default. You could also make an argument that the deficit-reduction plan marks an official end of the concept of "stimulus."
For the construction industry, this is a complete reversal from 2009. Of course, that's when the federal government looked to the industry to solve the sudden unemployment problem by delivering an estimated $131 billion in stimulus funding in order to possibly boost jobs, to now, when it seems poised to now reduce future construction funding in order to help reduce the deficit. (According to Tom Ichniowski's latest update on the debate--Tom's ongoing reporting is "must-read" for any construction industry members interested in this topic--the cuts may not be too significant in the near term, at least.)
The economic benefits of the American Recovery & Reinvestment Act of 2009, aka the "stimulus," have been widely and hotly debated. Because it didn't single-handedly solve the nation's severe jobs crisis, some have called it a failure. Recently, though, as the Freakonomics blog wrote, some analysis has found it to have been "generally effective," especially the portion of it related to infrastructure spending.
In fact, some suggest the end of stimulus spending may be one reason for the country's weakening economy. (In last week's report on GDP, data indicated that the economy grew by just a 1.3% annual rate during the second quarter of 2011.) In "What the new GDP numbers tell us about stimulus," Ezra Klein of the Washington Post quotes Dean Baker, an economist at the Center on Economic and Policy Research as saying that "the winding down of the stimulus has seriously dampened growth." (Klein's report should be interesting to construction industry folks; I suggest you read the entire report.)
Of course, there's no "stimulus" in the new debt deal, despite the fact that investment in infrastructure spending is commonly regarded as one of the better ways of boosting the economy and creating jobs -- which is just the thing that would really help the deficit, more people with jobs. (See President Ronald Reagan's remarks on the matter of investing in infrastructure here.)
But that ship has sailed. No politician in Washington, or almost anywhere, seems to want to argue in favor of such investment, despite the need for jobs and the economic sense that it makes compared to postponing such investment. (Readers can review ENR's article on the American Society of Civil Engineers' recently published report, "Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation" here.)
In short, stimulus is dead.
What are your thoughts? Share them below.