Covering Congress’ passage of the economic stimulus bill revealed an interesting but not surprising difficulty in valuing what comes out of Washington. The Washington Post reported that the bill would pump $152 billion into the economy. The New York Times set the value at $168 billion, a number used by several other media. And The Washington Times pegged it at $170 billion. Two weeks ago I attended a food-safety conference where attendees went slack-jawed at the bold proposal that the Food & Drug Administration’s budget be increased by a single billion. And here’s a measure where even those in the know are as much as $18 billion apart in their assessments of its benefit.
No doubt the stimulus package is a good one, for restaurants as much as other businesses. It was also heartening to see the White House and Congress, Democrats and Republicans, work together for a change. But we could use a little more collaboration between numbers geeks and non-geeks.
Friday, February 08, 2008
What's a few billion here or there?
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Peter,
ReplyDeleteI would have to differ with you on the overall effect that this stimulus package will have on the restaurant industry and the US economy overall. The thinking of the government giving the public extra dollars in their pockets in hopes of them spending the money instead of saving has been proven over and over again that there is very little to gain. There are many economists that feel that in today's economic environment that most will probably end up saving a portion of those dollars with the overall uncertainty of the US economy. Just the other day a news report stated that most leading economists feel that we are already in an recession.
Orrick,
ReplyDeleteA lot of economists indeed feel the way you do. But those of us who've been around for awhile remember the effect that the 2001 tax rebates had on restaurant sales. One of the industry's leading numbers crunchers noticed afterward that restaurant sales suddenly spiked. Unsure of the reasons, he carefully peeled back possible explanation after explanation, until the lone factor still standing were the rebates. He was convinced that the stimulus had an effect, just as many observers believe it will give the economy a jolt this time around.
The two bigger issues: Will that pop go bust as the rebates are spent, as many experts told an NRN colleague for a story that'll appear in tomorrow's issue of the paper; and whether the effects on restaurant sales will be diluted by the fuel-oil and credit situations. Consumers may have more pressing ways to spend the dough than in restaurants.
In any case, I appreciate your comment, and hope more readers will chime in.
Peter,
ReplyDeleteFirst off, I want to commend you on a great blog. I have enjoyed reading your posts and hope that more people will be part of the discussion.
As my macro econ professor in college always told our class, "the end results may be a bit ambigous!"
I do agree that there may be a increase in sales, but I am uncertain if this stimulus package will have real efficacy for the long-run. With only a $300 - $1200 extra in everyone's pockets, that is hardly a "real" overall positive effect.