Stimulus spending ramp-up expected in 2010
Infrastructure spending is set to step up in the second year of the stimulus program, which should mean more money flowing to private-sector employers, The Wall Street Journal reported. Still, economists say that won’t likely have a big effect on the unemployment rate, which most say is likely to continue a slow decline as the economy recovers.
The Obama administration’s economic-stimulus program has spent about a third of its total $787 billion budget during its first year, much of that to maintain social services and government jobs and to provide tax cuts for workers. Now, the pace and direction of stimulus spending are about to change, say experts.
“I think we’ll see a lot more stimulus money get into actual contracts and actual hiring in 2010 than we did in 2009,” said Kenneth Simonson, chief economist of the Associated General Contractors of America.
The ramped-up stimulus spending in 2010 will contribute 1.4 percentage points to gross domestic product growth this year, said Brian Bethune, chief U.S. financial economist for IHS Global Insight.
But that may not translate into significant improvement in the unemployment rate, Bethune said, which is a growing political threat for the administration and congressional Democrats.
Infrastructure spending “doesn’t really have a big impact on net employment, simply because a lot of the activity is mechanized,” he said. “We should be careful of how many jobs we expect to be created from that.”
Additionally, many signature projects, including $20 billion for doctors to create electronic medical records, $4.5 billion for an “smart” energy grid and $7.2 billion for broadband networks, are still in their very early stages.
Vice President Joe Biden will announce his own projections of the stimulus plan’s progress in a meeting with the president today. A senior administration official said ahead of the release of Biden’s report that the increase in the pace of infrastructure projects was expected to cause stimulus spending to “shift more towards private sector job growth.”