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Stimulus: Waiting for Obama


Mass layoffs. A dismal outlook for retailers. The prospect of state budget cuts. An economy in contraction, and forecasts that the decline will accelerate.

If lawmakers are going to pass measures to boost the economy, time is of the essence. Congress is meeting this week in a lame-duck session, but it is not precluded from coming back before the end of the year.

Despite lawmakers from both sides of the aisle agreeing that something must be done, Congress may not pass a substantial stimulus package for another two months at the earliest given all the disputes over what kind of stimulus is best, how much is needed and how to pay for it. Also consuming their time: debate over whether to offer rescue money to the Big Three automakers...

Lakshman Achuthan, managing director of the Economic Cycle Research Institute, also urges the federal government to act immediately to offer fiscal aid to states and local governments.

"Now is not the time for either to falter as it will only make the quickly intensifying recession much worse," Achuthan said.

As for other stimulus measures Congress may pass, they should be ready to go as soon as several bellwether economic measures begin to turn upward, Achuthan said."That would greatly increase the chance ... [for] the type of recovery that produces jobs."

A job-based recovery, in turn, can help combat the housing crisis.

"Without a better job market, foreclosures will continue to mount," he explained.

Currently, the annualized growth rate on the research institute's Weekly Leading Index is the lowest it has been since 1949. Achuthan has said he doesn't see an economic recovery on the horizon yet...."
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