President Barack Obama’s $825 billion stimulus package is hatching against a drumbeat of dour economic news, from plunging consumer confidence to a stream of layoff announcements, some at firms that stand to benefit from the plan.
The developments are raising new doubts about whether the plan will be enough, or come in time, to moderate an increasingly severe downturn. They also underscore the administration’s challenge: how to warn people that the plan might not be a cure-all without painting an overly pessimistic picture.
Economists have been ratcheting down their already weak growth forecasts even as a large stimulus plan has become more likely. A weekly survey by Macroeconomic Advisers LLC, a research firm, shows forecasters think the economy is contracting at a 4.3% annual rate in the current quarter, much worse than the 1.5% contraction predicted two months ago.
Corning Inc., a New York producer of fiber-optic cable, flat-screen television supplies and other products, said Tuesday that it would lay off 3,500 workers, or 13% of its work force, despite major provisions in the stimulus plan that could help the company.