The economic package for stimulus looks to be still a work-in-process in the Senate. People were expecting issues to be banged out so the package could be live on Monday but it is looking like Tuesday will be the day. We are talking around 827 billion dollars, a number that is very hard to wrap one’s head around. Even harder is trying to see how quickly this money will actually make a change to the millions of people that are out of work, underemployed and those on the verge of being laid off. People are responding to the supply destruction of jobs by trying to save money. I just don’t get it. For a lot of the large companies that are laying off people and shuttering manufacturing plants in some areas, how are they going to make money? In the case of multi-national giants like Intel with billions of dollars of cash on hand, they can sit it out – but only for so long.
What will happen six months to a year from now at earnings time? The people who are laid off now will not be buying things over the next year if there is no work. They will be having a hard time paying the mortgages, making rental payments, getting food and warm clothing. There will be less room for buying iPods – no matter what people say about always finding money for things that they want.
I see it with tax clients who are cutting corners or who have been laid off. There are tough times still ahead and not having my crystal ball working at 100% I can’t tell you when the bad times will be bottomed out. For the short term, I expect that the stock market will still pop when the stimulus package comes out but I don’t see anything to indicate that it may maintain any kind of growth.
I hope I am wrong. In the meantime, hang onto your cash and make sure that your bills are paid if you can. Utility companies are cutting power if clients miss a couple of payments in some localities. Not a good thing in cold or wet climates.
As of now for my Californian friends, no word on any changes to the dispostion of California Tax Refund checks. Everything is still on hold until the end of February and at that point who knows if it will be checks, direct deposit, warrants or credit to next year’s tax payments.
Be safe and healthy!
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Kim Isaac Greenblatt
Economic Stimulus Package Looks To Be On Tuesday