Fiscal Stimulus, Rebates, and the Economy

One economics firm thinks the checks from Uncle Sam will provide a huge lift.


How much will the fiscal stimulus package help the economy? The computer model over at Macroeconomic Advisers gives this answer:

The economic stimulus that we expect from these rebates is a key determinant of the GDP growth profile in our forecast. We assume that households (on average) spend about 40% of the rebates within several months of receiving them. This provides a very important boost to consumption growth through the middle of the year. With that boost, and the other (less important) aspects of the package, we expect the fiscal package to add about 2 percentage points to real GDP growth in both the second and third quarters.