Mustard seeds (or green shoots, if your prefer) are appearing everywhere, from credit markets to manufacturing to housing. And of course the 40 percent surge in the U.S. stock market since mid-March is hard to miss.
So here’s a question: If the American economy shifts back into growth mode this year, does Barack Obama deserve the credit? Now if you click over to Recovery.gov, you’ll see that the U.S. government has paid out roughly $37 billion in funds from the $787 billion American Recovery and Reinvestment Act. That’s not too much dough for a $14 trillion economy. And while 110 million households will eventually receive some $55 billion from the Making Work Pay tax credit, that money has only been popping up in paychecks since April 1.
Now compare the Obama fiscal stimulus to the money stimulus of the Federal Reserve. As described by Brian Wesbury and Bob Stein at First Trust Advisers: “Money supply measures are surging – in the past six months, M1 is up 25.2% at an annual rate, currency outstanding is up 15.4%, checking account balances are up 74.2%, and M2 is up 15.9%. To top this off, the Fed has … $1 trillion plan to basically print money and buy assets including treasury bonds.” Also note the language of Richard Fisher, president of the Dall Fed, in speech yesterday: “We have succeeded in pulling the economy back from the brink. We’ve come back from the abyss.”
Of course, the bigger question is whether voters in the 2010 midterm elections will view Obamanomics as a success. Let me know what the November 2010 unemployment rate is, and I will give you an answer.