Despite recent changes in the economy and General Motors Corp.’s announcement Monday that the company was beginning to turn around, an ASU economist said he doesn’t believe the federal government’s stimulus package or bailouts of large companies have worked or will succeed.

William Boyes, a W. P. Carey School of Business professor who earlier this year called the government’s involvement in the economy a disaster, said the federal stimulus money hasn’t stimulated anything.

“It’s a big waste of money,” he said. “[The stimulus money] had little short-term blips that took away from longer-term recovery.”

Boyes also laughed at the fact that GM said it has begun to turn around despite reporting losses of nearly $1.2 billion in the third quarter — he predicted GM will likely return to bankruptcy.

“GM might be optimistic, but they probably shouldn’t be,” he said. “They’re not going to be able to recover.”

Finance professor Herbert Kaufman disagreed with Boyes, saying there are good signs the economy is recovering, including the fact that GM plans to repay $6.7 billion in federal loans as soon as next month.

What is left of the auto industry has turned the corner, Kaufman said.

“GM will never be able to fully repay everything, but I think there are some glimmers of hope that it won’t be a viable concern going forward,” he said. “Certainly they’re in better shape than most people expected them at this moment in time.”

Boyes said he also disagrees with the federal government’s stimulus package and said government involvement cannot stimulate the economy because stimulus money simply transfers spending from one area to another.

Stimulus money only causes spending that would have occurred regardless to happen earlier, he said, calling Cash for Clunkers an example of people already planning to buy cars simply being motivated to do so a few months before they originally planned because of the deal.

“It stimulated people to buy earlier than they would have had otherwise, but all that does is take spending away from the future,” he said.

Also, Boyes said he expects interest rates to go up or the economy to fall into high inflation.

“I don’t think the stimulus did anything but just some temporary blips, and it’s going to come back to haunt us,” he said. “I fully expect us somewhere between a quarter and two years to be back in a downturn.”

Increases that have occurred, particularly a 3.5 percent increase in the country’s GDP late last month, are just temporary aberrations, Boyes said.

“We’re still in a slow down,” he said. “We’re not in a really vibrant recovery by any means.”

Kaufman, however, said both the stimulus money and the Federal Reserve Board’s actions have had positive impacts across the U.S.

“I don’t think [spending] has been borrowed from the future, and I don’t think [the current growth] would have happened quite so quickly had there not been a stimulus program and had the Federal Reserve not been that aggressive,” he said.

Kaufman also said he doesn’t see the possibility of another downturn.

“There’s always the possibility of a double dip, but I don’t see it as the data seems to be pretty positive lately,” he said. “Not just the GDP numbers but a fairly substantial amount of data seems to be pretty positive.”

Though not strong, Kaufman said the economy is in the beginning of a recovery.

“Until consumer spending becomes more robust, I think we can stay in recovery, but the pace of it is going to be rather muted,” he said. “But I think it’s going to be recovery nevertheless.”

Boyes, however, said the U.S. economy may be at the scariest point it has ever been.

“If not ever, than at least since Franklin Roosevelt,” he said. “I am very pessimistic.”

Economics freshman Leah Luben said she agrees with Boyes that the stimulus money only motivates people to buy earlier.

“The stimulus money appeals to consumers who are already willing to buy,” she said. “Not necessarily to consumers who are completely out of the market.”

People put too much emphasis on the effect of stimulus money, Luben said.

“While I do agree that it does have a positive impact in moving forward things, [stimulus money] doesn’t have as much of an impact as people say,” she said.

Luben said she believes in some part of both Boyes and Kaufman’s positions.

“I certainly think that the government does have some role in providing help in difficult times, but it’s not necessarily their job always to look after the economy, especially in a country like this where the economy should be ruled on its own,” she said.

Reach the reporter at salvador.rodriguez@asu.edu.