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The Council of Economic Advisers released its first quarterly report on the economic impact of the stimulus. The headlines seized on a single number in the report: one million, the council’s estimate of how many jobs the stimulus had created or saved. But how solid is that number?
According to the report itself, not very. “Any estimates of the impact of the ARRA at this early stage must be regarded as preliminary,” noted the report, “and understood to be subject to substantial uncertainty.”
Is the American Recovery and Reinvestment Act of 2009 working? At the time of the act's passage last February, this question was hotly debated. Administration economists cited Keynesian models that predicted that the $787 billion stimulus package would increase GDP by enough to create 3.6 million jobs. Our own research showed that more modern macroeconomic models predicted only one-sixth of that GDP impact. Estimates by economist Robert Barro of Harvard predicted the impact would not be significantly different from zero.
Now, six months after the act's passage, we no longer have to rely solely on the predictions of models. We can look and see what actually happened.
The data available so far tell us that the government transfers and rebates have not stimulated consumption at all, and that the resilience of the private sector following the fall 2008 panic not the fiscal stimulus program deserves the lion's share of the credit for improvement from the first to the second quarter.
Gallup Daily economic data aggregated on a monthly basis show that job creation in August is just not taking place in the U.S. economy. While Gallup data for the month also show a slight moderation in job loss, this is not sufficient to take up the slack for a 35% decline in the rate of job creation compared to a year ago.
And, while confidence in the future direction of the U.S. economy is at its highest level in 20 months, Gallup data also show a continued delinking of consumer spending -- which is down 33% from a year ago.
So, what did we get for our $787 billion dollars? The honest answer? Not much.
uh, that money wasnt for us (citizens), I hope people realize this.
It was for the bankers. Have foreclosures gone down? No, employment gone up? NO.
I could of told you the stimulus wouldn't help even before they went through.
Most of us are quite aware that these stimulus and bailout plans weren't going to do a damn bit of good ... .