All stimulus plans are not created equal

By Pedro Nicolaci da Costa - Analysis

NEW YORK (Reuters) - As consensus grows on the need for a second U.S. fiscal stimulus package, economists say helping those most in need is the best way to ensure every dollar the government spends feeds directly into growth.

In particular, things like expanding access to food stamps, extending unemployment insurance benefits and investing in job-producing infrastructure projects would be most effective in giving consumer spending an immediate boost, analysts say.

"As soon as the checks are cut, it has an immediate benefit to the economy," said Mark Zandi, chief economist at Moody's Economy.com and a supporter of Republican presidential candidate John McCain.

In the spring, the government spent over $100 billion (62 billion pounds) on tax rebates for lower- and middle-income families. The intention seemed noble enough, but the results were disappointing.

Growth picked up in the second quarter but the boost was short-lived. The economy shrank 0.3 percent in the third quarter, its worst performance since the 2001 recession.

The U.S. personal saving rate, barely positive in recent years, spiked to a 13-year high of 5 percent in May as debt-strapped consumers held onto a large share of the windfall.

With the United States facing a likely recession, Democrats in Congress have called for further measures to help the economy. House of Representatives Speaker Nancy Pelosi has signalled she may push for a second stimulus package in a post-election "lame duck" session of Congress.

The chances of fresh measures emerging are mixed. The White House has said it would prefer to focus on steps already underway to help settle jittery credit markets.