In its latest quarterly report released by the White House’s Council of Economic Advisers (CEA), the fourth since the American Recovery and Reinvestment Act (ARRA) of 2009 was made into a law, it seems that President Obama’s stimulus plan’s goal of saving or creating 3.5 million jobs by the end of 2010 has been already achieved.
Reporting the jobs impact of the Recovery Act, Christine Romer, the chairwoman of the CEA said that as per a model based approach; 2.5 million jobs have been saved or created as of the second quarter of 2010. As per another approach that projected the likely path of employment based on the information available through the end of the first quarter of 2009, 3.6 million jobs have been saved or created as of the second quarter of 2010 than otherwise would have been in the absence of the Recovery Act. As per the projection approach, President Obama’s jobs goal has been achieved two quarters earlier than anticipated.
However the figures as reported by the CEA have been dismissed by some economists and Republicans in Congress who do not place much confidence in the figures since they are based on mathematical formulas rather than an actual headcount of people whose jobs have been secured as a direct result of the stimulus funding.
“The 3.5 million is a mystical, whimsical number that comes out of models that rest on extremely rosy projections,” said Veronique de Rugy, an economist at George Mason University’s Mercatus Center.
“The administration’s new stimulus jobs ‘saved and created’ claim lacks a basis in reality,” said Oversight and Government Reform Committee Ranking Member Darrell Issa, R-California while pointing to the current 9.5% unemployment rate.
However, Romer has sought to pre-empt these concerns in a post on the WhiteHouse.gov website stating: “Our review of a wide range of other estimates of the employment effects of the Act shows that our model-based estimate is similar to that of outside experts. There is obviously a great deal of uncertainty around any jobs estimate. But, our compendium of outside estimates shows that respected analysts across the ideological spectrum, as well as the non-partisan Congressional Budget Office, agree that the Act has had a significant beneficial effect on employment and output over the past year.”
But things do not appear to have gone as per the estimates of the stimulus plan. At the beginning of 2009 before the Recovery Act was passed, Romer had predicted that the stimulus plan, if passed was expected to keep the unemployment rate around 7% at the end of 2010. However, the administration has since then revised the unemployment figure to 9.8% for the end of the 2010.
The report also finds that in addition to the substantial effect on jobs, the Act has been instrumental in leveraging private capital and allocating important investments critical to the enhancing the future productivity of the US economy.
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