Fiscal Stimulus—Is More Needed?

Because we agree that the current economic situation is quite dire, we explore in this Strategic Analysis the possibility of an additional fiscal stimulus of about $450 billion spread over three quarters. We start from a plausible baseline projection, which we obtain by updating and verifying our work for the November 2007 Strategic Analysis, but we do not initially include the effects of the recently passed stimulus plan. We then simulate the effects of that plan. Finally, we simulate the effects of a $600 billion stimulus spread over four quarters, starting in the third quarter of this year.