U.S. Economy, Scott Walker is on the line

In less than a week we have had two separate Republican County Executives touting the benefits of the Recovery and Reinvestment Act (federal stimulus). Since this totally conflicts with the talking points of Milwaukee County Executive and endless Republican candidate for governor, Scott Walker, we believe that he is probably not pleased with his two colleagues. In the two blog postings we suggest that each Republican official may be due for a nasty phone call from Walker. We barely got the "Dan, Scott Walker is on the line" blog post up and then saw a report from the Wall Street Journal regarding the effects of the stimulus so far. The story brings bad news for Scott Walker's talking points and good news for the U.S. Economy. The conservative paper that published Walker's hating of the stimulus, is now reporting that the U.S. Economy has received a much needed lift from it.

Much of the stimulus spending is just beginning to trickle through the economy, with spending expected to peak sometime later this year or in early 2010. The government has funneled about $60 billion of the $288 billion in promised tax cuts to U.S. households, while about $84 billion of the $499 billion in spending has been paid. About $200 billion has been promised to certain projects, such as infrastructure and energy projects.

Economists say the money out the door -- combined with the expectation of additional funds flowing soon -- is fueling growth above where it would have been without any government action.

Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter -- something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.

For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. "Without that extra stimulus, we would be somewhere around zero," said Jan Hatzius, chief U.S. economist for Goldman.

Since Scott Walker has so deeply (politically) invested in the failure of the stimulus and our economy, we can't imagine that he would be very happy hearing this bit of news. If Racine County Executive Bill McReynolds and Waukesha County Executive Dan Vrakas did get angry calls from Walker, we can't imagine the kind of foul verbal beat down he is going to deliver when he tries to call the U.S. Economy.