The National Federation of Independent Businesses (of which I am a member) says that its members aren’t particularly optimistic:
“Continued weak sales and threatening domestic policies from Washington have left small business owners with little to be optimistic about in the coming year,” said the federation’s chief economist, William Dunkelberg, in a statement.
Small business owners are not in a hiring mood because customers are not in a spending mood, the group said. Owners continued to liquidate inventories and weak sales trends gave them little reason to order new stocks.
Here’s a revolutionary plan: instead of a second stimulus package (I continue to hear calls for such), how about a first stimulus package? Take the entirety of the original stimulus plan that was targeted for 2011, 2012, and beyond and spend it now on things for which it can be spent now. Let 2011 and beyond take care of itself. If the real purpose of the plan is Keynesian stimulus, that’s a perfectly legitimate, reasonable suggestion.
That would basically be unemployment insurance, and plugging the gaps in joint federal-state programs (like Medicaid) if you don’t want to give money to states directly.
So what? We have been told so often that I probably mumble it in my sleep that unemployment insurance has a very high multiplier because the unemployed will spend almost all of it. So spend it there, that is where the biggest bang for your stimulus buck is.
Of course, there is the possibility that this will delay a recovery in unemployment.
Linky Full paper. More here, here, , and here.
Bottom line of the research in this area is that people spend far more time looking for a new job at the end of their unemployment insurance than early on. Thus, lengthening unemployment insurance will lengthen the time until the labor market will recover.
Totally shocking I know…people just love to work, after all the definition of work is,
Oh, no. Sorry, my bad, that is the definition of fun.
Well I don’t know if my comment was simply eaten or is in Dave’s spam filter due to links.
Anyhow, so what about extending unemployment benefits. We’ve been told many times that is where we can find a large multiplier for that kind of spending. Granted it will extend the length of unemployment and likely mean that we will see unemployment drop later rather than sooner, but you can’t have everything.