Squeezing the Most From a Stimulus Plan

The size of a possible stimulus plan rises as the economy contracts, and that is happening at a 4 percent annual rate, according to current estimates, or eight times as fast as it was this summer. Just offsetting that contraction requires a federal infusion of at least $400 billion, many economists calculate. And even that would not restore a healthy economy.

"The hope is that the next stimulus package will be large enough to move the economy from big negatives to zero growth," said Mark Zandi, chief economist at Moody's Economy.com. "That is the benchmark today: zero growth."

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The stimulus package, in contrast, puts up government money as a substitute for the spending and investment that is no longer taking place in the private sector — despite low interest rates — so that the economy can grow again, or at least stop shrinking.

That makes the stimulus package ever more important if the economy continues to deteriorate at its present pace. Not since the first quarter of 1982, in the midst of a severe recession, has the gross domestic product contracted at a 4 percent annual rate in a single three-month period, as a growing number of forecasters say it is now doing, according to Blue Chip Economic Indicators.

In America's $14.4 trillion economy, that means the output of goods and services has been declining by nearly $50 billion a month since September — a decline the government will find itself under ever more pressure to reverse if demand in the private sector does not revive.