WASHINGTON – As Congressional wrangling over the economic stimulus package stretches into 2002, any impact it could have on curing the recession diminishes while its potential for causing price inflation down the road increases.
Fiscal policy takes so long to put into action that "you usually end up stimulating an economy that no longer needs to be stimulated," said CUNA economist Mike Schenk. "If there is no package at all, there will be less stimulus and the economy won't grow as fast. The flip side is that there won't be as much inflation."
Economists generally agree that the package would add buoyancy to any recovery, and that the anticipated recovery next year will be less robust without it. A growing number, however, are beginning to express concern that the measures could prove to be "too much, too late" because the Federal Reserve's interest rate cuts have already turned the economy around.
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