Another Butterfly Effect?
Recently, a post on the SUU Macroblog expressed the viewpoint that the stimulus package ultimately failed to generate the same return as the amount initially spent. In the same vein, this article from the Associated Press details the failure of Obama's recent repeat buyer credit program to stimulate sales in the sluggish housing market. Unlike the "Cash for Clunkers" program which artificially inflated sales before sharply falling (the "Butterfly Effect"), the repeat buyer credit program hasn't stimulated sales at all. The program was designed to ease the purchase of a new home by current homeowners. However, this time, the failure wasn't the program, just the timing. The severe winter weather and the fact that a third of homeowners are still underwater on their mortgages have effectively negated the chance of many homes being purchased this season. It remains to be seen whether the program can actually revive the housing market or if it turns out to be just another quick fix.