The American Reinvestment and Recovery Act - Did it stimulate you?
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Today at VoteFacts we are delving into the math and outcomes of the stimulus.
There has been much made of how effective the American Reinvestment and Recovery Act (the stimulus) was in getting Americans working again.
One side would have you believe that the stimulus did nothing to help put Americans back to work.
The other would say it saved our nation.
So, which is it? We think you should decide for yourself. Gather facts here and then cast your vote. Here are bullet points on the subject and the links to the reports in their entirety. To be as fair as possible, we have included a lot of data because it is a complex subject.
Read, Learn, Vote, Enjoy!
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The Congressional Budget Office (CBO), and Recovery.gov
CBO estimates that nearly 90 percent of the budgetary impact from the February 2009 economic stimulus package was realized by the end of fiscal year 2011 and that the law added $733 billion to budget deficits over the 2009 - 2011 period." CBO Report, Page 8
Estimated stimulus expenditures have been increased from $787 billion to $840 billion dollars. The stimulus has distributed funds in 3 ways, $279.8 billion in tax benefits, $233.4 billion in contracts, grants, and loans, and $225.6 billion in entitlements. Recovery.gov
The rate of unemployment in the United States has exceeded 8 percent since February 2009, making the past three years the longest stretch of high unemployment in this country since the Great Depression. CBO Report
After falling by 7.5 million during the recession, employment increased by only about 1 million jobs (or 0.8 percent), on net, between June 2009 and October 2011. CBO Report, Page 5
From February 2010 to February 2012, only 3.5 million jobs were created, on net, on a seasonally adjusted basis. The Congressional Budget Office (CBO) projects that, under current law, employment will grow at an average rate of about 2 million jobs per year over the next few years. At that rate, employment will not reach its prerecession peak until the middle of the decade. CBO Report, Page 1
During the third quarter of calendar year 2011, recipients [of stimulus funds] reported, ARRA funded more than 400,000 full-time-equivalent (FTE) jobs. Those reports, however, do not provide a comprehensive estimate of the law’s impact on U.S. employment, which could be higher or lower than the number of FTE jobs reported, for several reasons (in addition to any issues concerning the quality of the reports’ data). CBO Report, Page 1
It is impossible to determine how many of the reported jobs created under the American Recovery and Reinvestment Act of 2009 (ARRA) would have existed in the absence of the stimulus package. CBO Report, Page 1
All told, CBO’s estimate of the increase in employment attributable to ARRA (stimulus) for calendar year 2011 was revised downward from a range of 1.2 million to 3.7 million Full Time Employee (FTE) jobs to a range of 600,000 to 3.6 million. CBO Report, Page 8
In October of 2011, 42 percent of workers who were unemployed had been out of work for more than 26 weeks and about 30 percent for a year or more - rates of long-term unemployment that are unprecedented in the period following World War II. CBO Report, Page 13
The number of unemployed workers per job opening averaged about 4 ½ throughout the first half of 2011, down from an average of slightly over 6 in 2009 but still much higher than it was before the recession. In addition, the number of people who are employed part time but want full-time work averaged about 8.5 million in the first half of 2011, slightly below the number in the previous two years but still nearly double the prerecession figure. CBO Report, Page 48
The creation of new jobs is probably hindered today not only by the weak current demand for goods and services but also by some firms’ lack of confidence in the sustainability of the economic expansion and by remaining constraints on access to credit for some firms. In addition, some businesses may be unsure and concerned about how they will be affected by the implementation of recently enacted financial and health care legislation, by the governments regulatory policies in other areas, and by possible future changes in federal tax and spending policies. CBO Report, Page 46
The effects of the stimulus (ARRA) on economic output peaked in the first half of 2010 and have since diminished, CBO estimates. The effects of ARRA on employment are estimated to lag slightly behind the effects on economic output; CBO estimates that the employment effects began to wane at the end of 2010 and continued to do so throughout the first quarter of 2012. Still, CBO estimates that, compared with what would have occurred otherwise, ARRA will raise real GDP in 2012 by between 0.1 percent and 0.8 percent and will increase the number of people employed in 2012 by between 0.2 million and 1.1 million. CBO Report, Page 2
A large portion of the economic and human costs of the recession and slow recovery remains ahead. In mid-2011, according to CBO’s estimates, the economy was only about halfway through the cumulative shortfall in output relative to its potential level that will result from the recession and the weak recovery. CBO Report, Page 12
Although CBO has examined data on [economic] output and employment during the period since American Reinvestment and Recovery Act’s (ARRA’s, a.k.a. stimulus) enactment, those data are not as helpful in determining ARRA’s economic effects as might be supposed because isolating the effects would require knowing what path the economy would have taken in the absence of the law. Because that path cannot be observed, the new data add only limited information about ARRA’s impact. CBO Report, Page 2
CBO estimates that relative to what would have happened without the economic stimulus (ARRA), it raised real GDP by between 0.7 percent and 4.1 percent in 2010 but is raising economic output (GDP) by a smaller amount in 2011 and will do so by even less in 2012. CBO estimates that the ARRA raised employment (relative to what it would have been otherwise) by between 0.7 million and 3.3 million jobs in 2010, but the law’s impact on employment will be progressively smaller in 2011 and 2012. CBO Report, Page 5
The U.S. economy has struggled to recover from the deep recession that, according to the National Bureau of Economic Research, began in December 2007 and ended in June 2009. Although total output started to expand again more than two years ago, the pace of the recovery in output and employment has been quite slow, and the economy remains in a severe slump. Real GDP in the third quarter of 2011 was about 5 percent below CBO’s estimate of its potential. CBO Report, Page 5
Although the most recent recession ended more than two years ago, the recovery has been slow and the economy remains in a severe slump. From December 2007 (when the recession began) to February 2010 (when the number of people on business payrolls was at a low point), the U.S. economy lost 8.7 million jobs, on net, on a seasonally adjusted basis. CBO Report, Page 1
In contrast to its positive near term macroeconomic effects, the economic stimulus will reduce economic output slightly in the long run, CBO estimates - by between zero and 0.2 percent after 2016. But CBO expects that the legislation will have no long term effects on employment because the U.S. economy will have a high rate of use of its labor resources in the long run. CBO Report, Pages 8-9
Bureau of Labor Statistics
The national unemployment rate was 8.1 percent in April, little changed from the prior month but down from 9.0 percent a year earlier. Total nonfarm payroll employment increased by 115,000 over the month and by 1,816,000 over the year. BLS Report
In February, 2.6 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. there were 1.0 million discouraged workers in February, about the same as a year earlier. (not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. BLS Report
Mass layoff events in April increased by 115 from March, and the number of associated initial claims increased by 14,290. In April, 287 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 33,243 initial claims. BLS Report
Unemployment rates were lower in March 2012 than a year earlier in 342 of the 372 metropolitan areas. BLS Report
The unemployment rates for adult men (7.5 percent), adult women (7.4 percent), teenagers (24.9 percent), whites (7.4 percent), and Hispanics (10.3 percent) showed little or no change in April, while the rate for blacks (13.0 percent) declined over the month. The jobless rate for Asians was 5.2 percent in April, little changed from a year earlier. BLS Report
The unemployment rate for high school students, at 25.2 percent in October 2011, was more than twice the rate for college students (10.7 percent). Unemployment rates for black (38.8 percent) and Hispanic (36.1 percent) high school students continued to be higher than for white high school students (22.6 percent). BLS Report
The US Bureau of Economic Analysis (BEA)
U.S. gross domestic product (GDP) stood at negative 6.7 percent in the first quarter of 2009 when President Obama took office. It climbed to 3.9 percent in the first quarter of 2010, before it began to decline again, falling to as low as 0.4 percent in the first quarter of 2011. However, it has increased each quarter since then and, in the fourth quarter of 2011 stood at 2.8. BEA GDP
Real gross domestic product - - the output of goods and services produced by labor and property located in the United States - - increased at an annual rate of 1.9 percent in the first quarter of 2012 (that is, from the fourth quarter to the first quarter) BEA GDP
Chief Actuary - Center for Medicare and Medicaid Services (CMS)
Real economic growth resumed in the third quarter of 2009, but the unemployment rate has remained relatively high to date, and increases in real earnings have been small (2010) or negative (2011). CMS Report, Page 12