U.s. Economic Stimulus Package - 843 Words

U.S. Economic Stimulus Package Jason Leitch-Williams St. Gregory’s University U.S. Economic Stimulus The Great Recession has been one of the largest fiscal crises of the current generation and the economic downturn that resulted has been recorded as the longest and most severe since the Great Depression (The Impact of the Recovery Act on Economic Growth). Although the economy has reached a stage of recovery, the effects of the recession to real GDP can be seen in business cycle figures for the period. Shown in Table1, the change to real GDP was measured at -3.9% for the recessionary period. This step into recovery was brought about by an aggressive stimulus package based on the principles of Keynesian economic theory†¦show more content†¦The primary tactics utilized by the stimulus plan relied heavily on expansionary fiscal policy through the use of increased government expenditures as seen in Table 2 (The Impact of the Recovery Act on Economic Growth). Tax cuts were also instituted to stimulate economic growth (â€Å"Why Did Obama Extend the Bush Tax Cuts in 2010?,† n.d.). According to Keynesian economists, increased government spending would increase consumer confidence and spending which would provide for a reduction in unemployment rates through increases in job creation (John Maynard Keynes). Additionally, increases to disposable income would be seen through the use of targeted tax cuts and would ultimately result in an increase in consumption (Arnold, 2001). This can be seen in Chart 1 as an increase in disposable income that occurs concurrently with a rise in consumer spending. The success of the stimulus package has yet to be fully recognized. Some argue that the stimulus package has been unsuccessful and feel this can be seen in the changes in the unemployment rate. As seen in Chart 2 the actual unemployment rate was ranked at approximately 9.1% during the height of the stimulus package which is 2.6% higher than White House forecasts for the same period in 2011. In an