The monthly American Pulse survey by Big Research reports that 55.6% of Americans say the economic stimulus package is not working. Most also feel the recession is not over. We disagree, but understand why people feel this way. 

The unemployment rate has always been the key economic indicator for most Americans. Echoing this, 72% of respondents in this survey indicated they felt the recession would be over when unemployment declined. 

We believe the recession ended in Q2 and think Q3 and Q4 2009 GDP growth rates will be surprisingly strong. The results will be helped by weak prior year numbers, but the stimulus package also had a positive impact. We expect positive growth in 2010 and fall into the camp that thinks we are looking at a square root recovery (a strong but short V shaped recovery followed by weaker growth). 

The key reason is we expect job growth to weak and the unemployment rate to stay high. Corporations have been battered by the recession. Even if the economic recovery is strong, companies will not rush to hire full-time staff. Instead they will stay lean and flexible through the increased use of technology, contractors, partnerships and outsourcing.  

The lack of job growth will keep a lid on consumer spending and overall economic growth. 

We also believe it will result in more people pursuing self-employment. 


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