Wednesday, July 8, 2009

The economy is hitting the ordinary people - is the stimulus working?

I flew from San Francisco to Boston last night. The cabbie who took me to the SFO airport was a person of Egyptian origin. She had an undergrad degree in Philosophy from Egypt. She migrated to the US about 10 years ago. She had two school going daughters. But she couldnt get a job as a teacher in the US. So she decided to drive a cab. She took a class, passed the exam and has been a cabbie for close to three years now. And she said that her business was down by around 30%. I asked her how much she made now and how much it cost to run the cab - let's start with her cost - she pay $350 a week to keep her medallion and another 150 a month to the San Jose airport to pick up passengers. Her average revenue before the downturn was about $200-$300 per day. rental, gas and maintenance took out about 125-175. She made about 75 -150 a day. so about 4K per month. Enough to live in a one bedroom. and now she makes 30% less.

Because Airtraffic is down, less number of people are flying - the are car pooling - they are taking public transport. In fact, the long term parking in SFO is less crowded than it used to be earlier.

The cabbie who picked me up in Boston had a smilar story - lesser number of people flying now. His income was down by 20-30%. none of these are accurate numbers, but they give a sense of the scale of the downturn. we need to continue to wear seat belts tight.

Does this the mean the stimulus is not working? I think its too early to teel. even though jobless rates in May were higher than expected, the trickle down effect of a stimulus plan takes time. Let's see how the story is in August. My sense is an additional stimulus will be needed.

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