My New Blog

Even before the President released his jobs proposal, CNN/Money was out with an article which basically said that the package will not work because it is not large enough -- “The kick to growth is going to be pretty small. It will add substantially less than 1% to GDP growth in 2012,” said Nigel Gault, the chief U.S. economist at IHS Global Insight. What the article misses is the most important point -- Confidence. Companies have plenty of money to hire. But without consumer and business confidence, it is not likely to happen. We don’t need a huge package for consumers and business to feel better. They need to know that the government is helping in some way.

As we keep pointing out, the economic numbers have not been that dismal. The Federal Reserve Board's recent Beige Book release confirmed that the economy is growing moderately with housing still the lagging sector. Consumer spending rose in July and the service sector continued to expand last month. These are important economic components. With a more solid foundation to the economy as opposed to two years ago, it is a much shorter step from where we are to recovery. However, companies will not hire and consumers won't purchase homes without confidence. The only danger in proposing this package is that it gets bogged down in political haggling, which would make consumers and businesses even less confident. So we say, make it small, but pass it quickly and confidently. Confidence is what we need.