Effects of the Government Stimulus May Show Up in Second Half of Year
Online, June 29, 2010 (Newswire.com) - With second quarter GDP growth results due next month, many people are already asking one question: "Just how much of an effect has government stimulus had on the economy?"
Although such knowledge may not be visible until later in the year as the government stimulus policies wane, noted financial advisor Dennis Tubbergen believes the clues are already in place if one looks in the right places.
Tubbergen, who is CEO of USA Wealth Management LLC, a federally registered investment advisory company, has been looking for the answers for months. For a few of the answers he refers to Forbes magazine columnist Garry Shilling's and his comments in his May Insight newsletter. Shilling states from the beginning of the recession in 2007 through February of 2010, personal income from wages and salaries, business income, rents, interest and dividend income and income from pensions, Social Security and unemployment insurance increased by $37.2 billion.
"That sounds like good news," notes Dennis Tubbergen, "but Shilling adds that income from those sources would have dropped by $413.1 billion were it not for a $450.3 billion increase in government transfer payments. First, you have to realize that the U.S. economy is dependent on consumer spending for about 70% of its economic activity."
According to an investment dictionary, a government transfer payment is defined as 'a payment made to an individual by the government via a social insurance program.'
"Here's the really important question," states Tubbergen. "What portion of the increase in consumer spending came about as a result of increased government spending? Based on the evidence presented here, one may assume most, if not all of it. If that's the case, this spending is not from current production, it's a loan taken against future production."
For more information on Dennis Tubbergen's views, visit www.dennistubbergen.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.