So far the most visible achievement on stimulus spending are numerous minor road and bridge repair and construction, which is good for the states and highway workers. I don't think this will offer any permanent jobs to former auto workers or IT workers who have lost their jobs in various business. One item of the stimulus spending is the so call 'weatherization' of federal office buildings which may require sophisticate engineering or architect considerations, because each building is different. I dont see any achievement has been made so far. It may take years to complete this item.
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Making Sense of Stimulus Spending
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Bernstein:Well, first of all, let's be very clear about this point. Our forecast at that time was right in the middle of every other forecast, and in fact, if we had had a forecast that was much worse than that, we would have been an outlier. We also would have been correct, it turned out. But the point is that the contraction of the economy in the fourth quarter – you should recall back then that was – the magnitude of that contraction was far larger than was expected. And so at the time our forecast seemed reasonable. Now, looking back, it was clearly too optimistic.
What I will say, though, and I don't want to lose sight of this, is that the American Recovery and Reinvestment Act, in our view, according to our analysis, will lead to an unemployment rate by the end of next year of 1.5 to 2 points lower than would otherwise be the case. And that is the direct result of the kinds of programs and projects we're talking about today, putting literally millions of people back to work who in the absence of this program would not be getting fully employed.
So Bernstein is sticking to the prediction that unemployment will be substantially lower with the stimulus bill than without. On that point there's good economic theory to support him. Last October, for example, Republican economist Martin Feldstein, who had been Ronald Reagan's chief economic adviser, wrote in the Washington Post: "The only way to prevent a deepening recession will be a temporary program of increased government spending." He argued for a package in the hundreds of billions of dollars. Later Feldstein wrote that the package Congress was considering was "a mistake" and said it should concentrate more on military spending and temporary tax credits for such things as home improvements and buying automobiles. But he added: "The problem with the current stimulus plan is not that it is too big."
But this time Bernstein is wisely refraining from saying where the jobs figures would be without the stimulus package. Wherever the jobless rate peaks, he's saying it would be 1.5 percent to 2 percent higher if the stimulus package had not been enacted.
Is that so? We know of no way to prove or disprove such a claim. What we can say is that in the three months after the stimulus bill was signed Feb. 18, the economy lost more than 1.5 million jobs, according to the BLS. So even if the president's 150,000-jobs claim is correct, that's about 10 percent of the total jobs lost.
Footnote: The Council of Economic Advisers is required to report periodically on "total job creation" produced by the stimulus spending, but that will also be a somewhat soft number. As noted in the first quarterly report issued under the stimulus act, "Total job creation includes direct, indirect, and induced jobs which are estimated using an econometric model."
"Direct" jobs are those created in government-sponsored projects and can be counted up in a fairly straightforward fashion. "Indirect" jobs are those that suppliers may add as they make the materials used in the project. But "induced" jobs are those that economists assume show up elsewhere in the economy as workers and firms who benefit from stimulus money spend more to buy goods and services. These might include retail sales jobs. The number of those jobs can only be estimated.
Sources
Romer, Christina and Jared Bernstein. "The Job Impact of the American Recovery and Reinvestment Plan," 9 Jan. 2009.
Executive Office of the President Council of Economic Advisers. "Estimates of Job Creation from the American Recovery and Reinvestment Act of 2009." Whitehouse.gov, May 2009.
"Remarks by the President on Alternative Energy." White House Press Office, 27 May 2009.
"Press Briefing by the Press Secretary Robert Gibbs and the Vice President's Chief Economis, Jared Bernstein." White House Press Office, 8 June 2009.
"Employment Situation News Release." Bureau of Labor Statistics, 5 June 2009.
Feldstein, Martin. "The Stimulus Plan We Need Now: The President-Elect Won't Have to Wait Till January to Act." Washington Post, 30 Oct. 2008.
© 2009
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