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Fiscal Stimulus: Modest, but welcome.

Written by A Forex View From Afar on Wednesday, February 13, 2008

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The Mighty Armada formed by Secretary Paulson, Mr. Bush, Congress and Senate have finalized and signed the Fiscal Stimulus Plan which will save the economy. Or not.

In case you didn't know what the stimulus pack contains here is a brief introduction:

"To be eligible for a full rebate, single tax filers must have 2007 adjusted gross income (AGI) below $75,000 and joint filers must have AGI below $150,000.

Adjusted gross income is not your annual salary. It's equal to gross income minus "above the line deductions," which are reported on page 1 of the 1040 tax form. Above-the-line deductions include deductible IRA contributions, alimony paid and, for the self-employed, some portion of money spent on health insurance or Social Security.

Single filers with AGI below $75,000 will get rebates of as much as $600. Couples with AGI below $150,000 will receive rebates of up to $1,200.

In addition, parents will also receive $300 rebates per child under 17; there is no cap on the number of qualifying children eligible."

Rebates will be received as checks, between May and July. A long time till then.
The first interest rate cut was back in September and by May we may see the effects of that rate cut in the economy too, hopefully.
It's no wonder most economists, questioned by the Wall street Journal, have said the Fiscal Stimulus Plan has a modest but welcome effect. The stimulus plan is seen more as a temporary boost, then a long term solution.

Going back to trading, this will probably give an anchor to equities somewhere in the future. Even if Wall Street and economists aren't too impressed, when numbers from May-June-July appear, equities could be poised to start a Bull Trend.

CNN: Rebates: What you need to know
WSJ: Economic Forecasting Survey, February 2008

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