Fed Spending Credited With Stemming Job Loss
While cautioning that the numbers are preliminary and the analysis is subject to revision, the White House issued a report today taking credit for adding or saving at least 1.5 million jobs in 2009 and turning around the recession.
Issued by the Council of Economic Advisers, the report says that after Congress adopted the President’s almost $800 billion recovery plan early last year “the trajectory of the economy changed materially toward moderating output decline and job loss.”
The report credits the American Recovery and Reinvestment Act of 2009 with lifting the country’s gross domestic product by at least a couple of percentage points in most of the last three quarters of 2009 and between 1.5 and three points in the fourth quarter.
As for jobs creation, the report says: “For the third quarter of 2009, we now have direct reports on jobs created or saved from a subset of recipients of ARRA funds. These reports identify 640,000 jobs that would not have existed but for the Recovery Act.”
Attempting to separate the impact of the Recovery Act from secular improvements that would have occurred anyway is difficult, the economic advisers acknowledge. So in preparing the report they compare the periods prior to implementation to the three quarters since the recovery spending began. Other, non-government analytics were also taken into account.
Overall, says the report, the actions of the federal government were an important factor in stemming job loss.
“As with real GDP, the timing of the change in employment behavior is suggestive of a key role for the ARRA and other stabilizing measures taken in February and March,” the advisers write, “Job losses moderated in the quarter after Recovery Act spending and tax cuts began. They then continued to slow greatly in the subsequent two quarters.”
Author: ERE Articles