April 1, 2011

The real economy is emerging as the stimulus is winding down

Veronique de Rugy

George Gibbs Chair in Political Economy

The unemployment rate for March dropped to 8.8 percent, which we should remember is the rate that the Administration said the economy would reach if the stimulus had not been passed. It took two years to reach this rate, and as it turns out, it is on the way down, not up. It didn’t take two years for the stimulus to work – rather, the real economy is finally emerging as the stimulus is winding down.

Efforts of some lawmakers to scale back spending has likely had a positive impact. The promises to cut spending is creating more confidence in the market.