More Weak Knee Problems at the Post on Stimulus

The Washington Post again tells us that the stimulus is "staggering." Just a few days ago they told readers that it was "breathtaking in size and scope." It might be helpful to tell readers that the collapse of the housing industry has lead to a $450 billion falloff in the pace of annual residential construction, the loss of $8 trillion in housing wealth will reduce annual consumption by around $450 billion, with the loss of $8 trillion in stock wealth leading to a further decline in annual consumption of $250 billion. In addition, the collapse of the non-residential real estate bubble will likely reduce annual demand by another $200 billion. This gives us a total decline in annual demand of around $1350 billion or $2,700 billion over two years. Next to a demand loss of $2,700 billion, an $825 billion stimulus package seems rather small. The Post might try to look for reporters who are better at arithmetic and more sure in their footing.

--Dean Baker