Stimulus Package Helps Economy, Banks, and Small Businesses Survive

Strategic Insights -

The stimulus package has significantly helped the economy by providing extended unemployment benefits, which have indirectly propped up big banks and small businesses such as Wal-Mart (WMT) and Big Lots (BIG). This has led to over six million people continuing to work, including those employed by these companies. As a result, the stimulus package has also created jobs and reduced debt defaults.

Key Takeaways:

  • The stimulus package has provided $19.0 billion in Federal Spending on unemployment benefits in the first three months of fiscal year 2010, which is higher than in the first three months of fiscal 2009.
  • The extended benefits have helped six million people continue to work, indirectly benefiting big banks like Bank of America (BAC) and JPMorgan (JPM) by reducing debt defaults.
  • The stimulus package has also helped small businesses such as Wal-Mart (WMT) and Big Lots (BIG) by keeping workers employed.
  • According to the non-partisan Congressional Budget Office, increasing aid to the unemployed is one of the most cost-effective ways to create jobs.
  • Southwest Airlines Co. (LUV) has outperformed industry expectations with its fourth quarter 2009 financial results, mainly due to the introduction of new products and cost-effective processes.
  • The company has achieved its 37th consecutive year of profitability in 2009 and has seen strong revenue and booking trends in early 2010.

Statistics:

  • $19.0 billion: Federal Spending on unemployment benefits in the first three months of fiscal year 2010.
  • 6 million: Number of people who would be left without income if extended benefits were not provided.
  • 0.8%: Year-over-year decrease in quarterly operating revenue for Southwest Airlines Co. (LUV) in the fourth quarter 2009.
  • 10 cents: Fourth quarter earnings per share for Southwest Airlines Co. (LUV), which is higher than the Zacks Consensus Estimate of 5 cents per share.
  • 37: Consecutive years of profitability for Southwest Airlines Co. (LUV) in 2009.

Sources:

  • "Initial Jobless Claims Rise" Zacks.com
  • "How the Stimulus Package Has Helped" Zacks.com
  • "Southwest Airlines Outperforms" Zacks.com
  • "Zacks Equity Research" Zacks.com
  • "Zacks "Profit from the Pros" e-mail newsletter" Zacks.com
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  • "About Zacks Equity Research" Zacks.com
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