HARTFORD, Conn. (AP) -- An economic stimulus package that President-elect Barack Obama is expected to announce Monday will not likely have a major impact on manufacturing until the end of 2009 or later, an analyst said Monday.
Obama is rolling out a plan that will require congressional cooperation even before he is inaugurated Jan. 20. His plan is likely to exceed the $175 billion he proposed during the campaign and would include an infusion of money for infrastructure projects, new environmental technologies and tax cuts for low- and middle-income taxpayers. It will not call for tax hikes for the wealthy.
Analyst Ann Duignan of JPMorgan said in a note to investors that machinery companies such as Caterpillar Inc., CNH Global, Deere & Co. and other manufacturers would not begin to feel an impact from federal spending until 2010.
"With a stimulus package we would expect demand for larger infrastructure-related equipment to drive a recovery in demand and in this scenario equipment demand would revert to trend by 2011," she said.
Duignan said she expects a decline in the North American construction equipment industry next year and the start of a recovery in 2010 and into 2011. However, she said the industry will remain "below trend" even in 2011.
She said she doesn't expect a stimulus package that would likely be approved until mid-2009 with spending increases starting sometime in fiscal 2010, which begins Oct. 1, 2009. As a result, spending increases would not start until sometime in 2010 with a significant impact on machinery expected shortly afterward, Duignan said.
Aides to Obama on Sunday called on the new Congress to pass by the Jan. 20 inauguration legislation that meets Obama's two-year goal of saving or creating 2.5 million jobs. Democratic congressional leaders said they would get to work when Congress convenes Jan. 6.
