Major headwinds continue to impact the economy. The potential for significant weakness in Europe and China along with destructive regulatory policies in the US have prevented a strong recovery.
However, even in the midst of the Great Depression, pouring money into the economy produced major gains in real growth and jobs. This is what happened from 1933 to 1937. In the midst of the Great Depression spending and growth averaged increases of roughly 10% a year. The unemployment rate went from 25% in 1933 to 14% in 1937. The turnaround occurred when Fed policy turned from highly restrictive to highly expansive.
Hence, Fed policy can create what appears to be a recovery in spite of serious negative forces. This past year the Fed increased bank reserves by more than 20%. This compares to an average annual increase of only 6% the prior two years. So far problems in the banking system have muted the impact this policy has had on the pace of spending.