Policy: The relation between GDP, unemployment and inflation is theoretically straightforward: the higher GDP the lower unemployment and the more upward pressure on prices (at least to some extent). When the Obama administration came into office it was faced with a situation where unemployment was headed up and GDP down. To counter this - as we know - a massive stimulus package was put into place. Now that we are some 15 months into this stimulus package please provide your opinion on how well it is doing. Please give some consideration to: 1) was the stimulus necessary in the 1st place, 2) was it big enough to do the job, 3) was it too big because of the deficits it created. What if anything should the administration be doing now?

This is an excellent question. As time passes, I wonder was the stimulus worth it? Are we better off? My overall assessment is that prices were inflated especially in the housing market and it was time that something occurred to bring them back down to reality. It was inevitable that the crash happened creating a windfall in the market. A chain reaction began and people started losing their jobs. In response to the decline in GDP and the rise in unemployment figures, President Obama was able to push through the American Recovery and Reinvestment Act. The act provided investment into infrastructure projects and provided capital to banks and the overall economy.
My opinion of the stimulus is good. I feel that it helped in that the injection of money into the economy prevented an all out free fall and helped gain consumer confidence. As evident by the stock market numbers, it has rebounded to the point where it is fluctuating around the 10,000 mark. The government will recoup a good portion of the money. At least this is my understanding. So, I believe that the stimulus was necessary. Whether or not it was big enough is hard to determine. I think that it was a good start. The administration should be keeping an eye on current unemployment rates, job growth, housing market numbers and take a look at the real GDP vs. the nominal GDP being that it is not the base year and to get an accurate assessment of where the economy stands. Then create there next plan of action.