(05/25/10) "CBO: Economic Effect Of Stimulus Bigger Than Projected" (by Rex Nutting, NASDAQ)

[Spang]

The $800 billion U.S. stimulus package has had a slightly bigger effect on the U.S. economy than was projected when it was passed more than a year ago, the Congressional Budget Office estimated Tuesday.

Through the first quarter of 2010, the stimulus boosted employment by an estimated 1.3 million to 2.8 million jobs, about a quarter or half million more than projected. Gross domestic product was 1.7 to 4.1 percentage points higher than it would have been without the stimulus, the nonpartisan budget office said.

The effect of the stimulus is expected to increase through the middle of the year, then fade, the CBO said.

The Source (http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201005251753dowjonesdjonline000 453&title=cbo-economic-effect-of-stimulus-bigger-than-projected)

[Spang]

Stimulus Raised GDP, Lowered Unemployment

ABC's Z. Byron Wolf reports: In a counterpoint to our earlier post on the skyrocketing debt: the nonpartisan Congressional Budget Office has a new report out on the now-more-than $800 billion off-budget stimulus program that Congress passed last year. Republicans have criticized that law ad-nauseum, pointing to the near-10 percent unemployment rate to argue that the stimulus did not work.

But today’s CBO report confirms that things could have been much worse without the stimulus. For instance, the report guesstimates that the bill created 1.8 million to 4.1 million (a huge spread!) jobs that wouldn’t have existed otherwise and the unemployment rate would have been between .7 to 1.5 percent higher without the stimulus.

The effects of the stimulus, according to the report, will continue to increase through part of 2010, before subsiding.

From the report:

Looking at recorded spending to date as well as estimates of the other effects of ARRA on spending and revenues, CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies on the economy and using various mathematical models that represent the workings of the economy. On that basis, CBO estimates that in the first quarter of calendar year 2010, ARRA’s policies:

• Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.2 percent,
• Lowered the unemployment rate by between 0.7 percentage points and 1.5 percentage points,
• Increased the number of people employed by between 1.2 million and 2.8 million, and
• Increased the number of full-time-equivalent (FTE) jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)

The effects of ARRA on output and employment are expected to increase further during calendar year 2010 but then diminish in 2011 and fade away by the end of 2012.

The Source (http://blogs.abcnews.com/thenote/2010/05/stimulus-raised-gdp-lowered-unemployment.html)

[Spang]

Although Mr. Perry has railed against the federal economic-stimulus program, billions of dollars from that initiative helped Texas legislators balance the current budget.

The Source (http://online.wsj.com/article/SB10001424052748704513104575256734081528528.html?m od=WSJ_hps_MIDDLESixthNews)

[Foggy]

My, my, my.

How come you're getting no responses on this one, Spang?

:laughing:

[observer21]

This really doesn't change the argument against it much, assuming the estimates are accurate. I still believe it would have been better had more time been spent specifying the details, or leaving its use more up to the businesses. Also, it still has yet to reach Obama's claims of what the bill would do.

From this (http://www.politico.com/static/PPM116_obamadoc.html) (pdf document) on payroll employment:

Without Stimulus 133,876,000
With Stimulus 137,550,000
Effect of Package Increase jobs by 3,675,000


Yet, according to the Bureau of Labor Statistics (http://www.bls.gov/web/empsit/ceshighlights.pdf) (also pdf), the current employment level is 130,161. That's below the "without stimulus" projection in the previous article. Of course, they have until Q4 of 2010 for the number to increase by 7 million to retain the original estimates.

I have no idea how they exactly calculate the effects of the stimulus, but it seems to me, if these numbers weren't artificially adjusted, that we have less jobs than projected under the effects of the stimulus package. Does anyone know how the CBO makes their estimates?

[Foggy]

This really doesn't change the argument against it much, assuming the estimates are accurate. I still believe it would have been better had more time been spent specifying the details, or leaving its use more up to the businesses. Also, it still has yet to reach Obama's claims of what the bill would do.OMFG, are you saying it wasn't perfect? :laughing:

Tell us all about how McCain's version would have been perfect. Can't wait to read about it.

Jobs lost and regained ...

http://www.washingtonmonthly.com/apriljobs.jpg


Our economy is heading in entirely the wrong direction, for people who hate Obama more than they love America ...

[observer21]

OMFG, are you saying it wasn't perfect?

Well, obviously it wasn't perfect, but no, I'm saying that it should have been better. Is it a crime to wish for the best from our representatives, not an inefficient mess that was made into law without the majority of people knowing the entirety of things enacted within the bill? And even if this can be said to be the one and only cause of current job growth (a notion I disagree with), still remember that that $800 billion in debt is still lurking back there.

And nobody said that McCain's plan could have or would have been better. I'm not saying it would have been worse, either. I'm saying that it's fruitless to ponder about a hypothetical alternative reality. We'd just be throwing our opinions at each other anyway.

And nobody is arguing that we're not gaining some jobs now either. What I'm arguing is if this jobs gain can be attributed to the stimulus or to natural market factors.

[foxyladi]

well....seems to me the stimulus was supposed to stimulate..:D..should be no surprise to anyone:eek: that it,s stimulating..:D

[Tybee]

Nothing good here:


http://www.cbo.gov/ftpdocs/108xx/doc10871/economicprojections.pdf

[Suzan]

But today’s CBO report confirms that things could have been much worse without the stimulus. For instance, the report guesstimates that the bill created 1.8 million to 4.1 million (a huge spread!) jobs that wouldn’t have existed otherwise and the unemployment rate would have been between .7 to 1.5 percent higher without the stimulus.

What accounts for that huge gap? That's not a guesstimate, it's the Grand Canyon, lol. Maybe the report attempts to explain it, but this article doesn't and that alone makes you wonder, although I have no doubt that the stimulus helped. What we need is a cost/benefit ratio or some equivalent of a profit and loss.

[foxyladi]

personally i,m still waiting for my stimulating:rotfl::rotfl: