Stimulus Boosted Jobs in 2nd Quarter, CBO Says (1 Viewer)

[donsutherland1]

Today, The Wall Street Journal reported:

The nonpartisan Congressional Budget Office said Tuesday the Obama administration's economic-stimulus plan has increased the number of employed Americans by between 1.4 million to 3.3 million during the second quarter.

The CBO, in a report released Tuesday, said the Obama administration's American Recovery and Reinvestment Act has lowered the unemployment rate by up to 1.8% and raised the level of gross domestic product by up to 4.5%.

Stimulus Boosted Jobs in 2nd Quarter, CBO Says - WSJ.com

For those who are interested, the full CBO report can be found at:

http://www.cbo.gov/ftpdocs/117xx/doc11706/08-24-ARRA.pdf

Note: One may have to cut and paste the CBO's URL in one's address bar in order to access the report.

CBO's estimates of the stimulus plan's effects in 2010 Q2 were:

- The stimulus raised real GDP by 1.7% to 4.5%
- The stimulus lowered the unemployment rate by 0.7 percentage points to 1.8 percentage points
- The stimulus increased the number of employed persons by 1.4 million to 3.3 million
- The stimulus increased the number of full-time equivalent jobs by 2.0 million to 4.8 million vs. what would otherwise have been the case

In any case, this latest assessment should provide ample ammunition for a continuation of the debate concerning what contribution the economic stimulus made.

 

[Boo Radley]

Likely true, but still too many unemployed for it to help hiim politically yet.

 

[buck]

While I don't think much of the stimulus should have gone forward and the cost effectiveness may not have been the greatest, I have no doubt it added jobs. How could spending some hundreds of bilions of dollars not create jobs?

Huh. I can't edit out that second "greatest". Weird.

 

[Grim17]

Here are some things that should be pointed out from the CBO's report:

First, some of the jobs included in the reports might have existed even without the stimulus package, with employees working on the same activities or other activities.

This seems like a distinction that should have been made prior to issuing this report. How can the CBO claim the stimulus created a certain number of jobs without determining if it actually did or not?

Although CBO has examined data on output and employment during the period since ARRA’s 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.

So what they're saying is, they have no clue if the economy would have been better or worse without the stimulus. WTF?

Since the CBO only issues reports when they are specifically requested, I would say that this report is nothing more than an exercise in political posturing. It's only real purpose is to give the administration some form of justification for spending 800 billion dollars that they didn't have in the first place.

.

 

[Renae]

How many of those were "Census" jobs?

 

[donsutherland1]

So what they're saying is, they have no clue if the economy would have been better or worse without the stimulus. WTF?

Since the CBO only issues reports when they are specifically requested, I would say that this report is nothing more than an exercise in political posturing.

Three quick points:

1. CBO used "various mathematical models" to assess revenue/spending-related effects to gain an understanding of the fiscal stimulus program's macroeconomic impact. Additional data related to output and employment was not helpful in assessing the macroeconomic impact for the reasons CBO stated. Moreover, CBO has no doubts that the economy would have been worse without the stimulus, as it concluded that the stimulus provided a minimum of a 1.7% boost to real GDP and 0.7 percentage point reduction to the unemployment rate.

2. CBO's findings are reasonably similar to research that was recently released by economists Alan Blinder and Mark Zandi, who used separate modeling. They found that the fiscal stimulus boosted 2010 real GDP by 3.4% (CBO's estimate: 1.7% to 4.5%), kept the unemployment rate 1.5 percentage points lower (CBO's estimate: 0.7 to 1.8 percentage points lower), and added almost 2.7 million jobs to U.S. payrolls (CBO's estimate: 1.4 million to 3.3 million jobs).

3. CBO is non-partisan. It responds to requests from Democratic and Republican Members of the House and Senate.

 

[donsutherland1]

How many of those were "Census" jobs?

CBO focused on a macroeconomic level, not microeconomic one.

 

[donsutherland1]

Interestingly enough--and these numbers will probably ignite partisan passions--CBO also provided estimates as to the provisions that were most stimulative vs. those that were least stimulative. Higher multipliers = greater stimulative impact e.g., a multiplier of 1.5 means that every $1.00 of stimulus spending generated $1.50 of economic output. Hence, a 1.00 multiplier is neutral, as every $1.00 of stimulus spending would lead to a $1.00 increase in output.

Mean Multiplier (average of the low and high estimate):
Purchases of goods/services by the federal government: 1.75
Transfer payments to state/local governments for infrastructure: 1.75
Transfer payments to individuals: 1.45
Transfer payments to state/local governments for other purposes: 1.25
Two-year tax cuts for lower- and middle-income people: 1.05
One-time payments to retirees: 0.65
Extension of first-time homebuyer credit: 0.55
One-year tax cut for higher income people: 0.40
Corporate tax breaks: 0.20

What does this mean?

If the federal government chooses to pursue another stimulus package, something that cannot be ruled out, though I don't believe such a package is needed right now, it should focus on high multiplier items and completely avoid low multiplier ones. That way, each additional dollar of stimulus would have greater bang for the buck and a smaller package would be needed than if the stimulus package diverts funding to low- or even very low-multiplier items.

 

[danarhea]

IMHO, any news of upticks or downticks on a per quarter basis are not going to say much for the big picture, as employment is going to be depressed for many years to come.

 

[Grim17]

3. CBO is non-partisan. It responds to requests from Democratic and Republican Members of the House and Senate.

Correct, but it isn't just told to do a report on something and they do it. They are given parameters by the ones who make the request. They are told what to include in their reports, what to omit, and often told which sources they can use as a basis for them.

The CBO is not allowed to broaden the scope of a report, even if in doing so, it would significantly alter their findings. That's why their reports include so many "what if's" and explanations for their findings.

We saw this with Obamacare. Their reports prior to it's passing that were requested by the administration and democrats on capitol hill, painted a very rosy economic picture for America if the legislation were enacted. After the bill was passed, they were requested to do several other, more broad studies on the Obamacare bill, and every one that has been released so far, has contradicted or greatly reduced the positive benefits they reported initially. That's because their scope was severely limited before by the administration.

 

[texmaster]

The report notes, however, that the Recovery Act's effect on output will gradually diminish during the second half of 2010. The law's effect on employment and unemployment will wane gradually in 2011 and beyond.

Funny how that was left out of the OP.

A temporary gain means nothing. Sustained growth is the key.

We also need to remember the unemployment number is well over what Obama and his liberal allies promised it would be if the stimulus was passed.

 

[Grim17]

How many of those were "Census" jobs?

That, and what percentage were public sector and private sector jobs is the reason I read the report in the first place. To my disappointment no such figures were given, because obviously they were not requested to obtain that information.

.

 

[texmaster]

That, and what percentage were public sector and private sector jobs is the reason I read the report in the first place. To my disappointment no such figures were given, because obviously that was excluded from the request they were issued.

.

We all know the stimulus was an abysmal failure. It did two things, prop up the economy with temporary jobs that are going away and included some of the biggest liberal pork barrel projects ever seen.

 

[liblady]

Interestingly enough--and these numbers will probably ignite partisan passions--CBO also provided estimates as to the provisions that were most stimulative vs. those that were least stimulative. Higher multipliers = greater stimulative impact e.g., a multiplier of 1.5 means that every $1.00 of stimulus spending generated $1.50 of economic output. Hence, a 1.00 multiplier is neutral, as every $1.00 of stimulus spending would lead to a $1.00 increase in output.

Mean Multiplier (average of the low and high estimate):
Purchases of goods/services by the federal government: 1.75
Transfer payments to state/local governments for infrastructure: 1.75
Transfer payments to individuals: 1.45
Transfer payments to state/local governments for other purposes: 1.25
Two-year tax cuts for lower- and middle-income people: 1.05
One-time payments to retirees: 0.65
Extension of first-time homebuyer credit: 0.55
One-year tax cut for higher income people: 0.40
Corporate tax breaks: 0.20

What does this mean?

If the federal government chooses to pursue another stimulus package, something that cannot be ruled out, though I don't believe such a package is needed right now, it should focus on high multiplier items and completely avoid low multiplier ones. That way, each additional dollar of stimulus would have greater bang for the buck and a smaller package would be needed than if the stimulus package diverts funding to low- or even very low-multiplier items.

oh boy.....seems what dems have been advocating makes sense.

 

[liblady]

We all know the stimulus was an abysmal failure. It did two things, prop up the economy with temporary jobs that are going away and included some of the biggest liberal pork barrel projects ever seen.

like what?

 

[Grim17]

like what?

Here's a list from an article on CNN.com:

• $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.

• A $246 million tax break for Hollywood movie producers to buy motion picture film.

• $650 million for the digital television converter box coupon program.

• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).

• $448 million for constructing the Department of Homeland Security headquarters.

• $248 million for furniture at the new Homeland Security headquarters.

• $600 million to buy hybrid vehicles for federal employees.

• $400 million for the Centers for Disease Control to screen and prevent STD's.

• $1.4 billion for rural waste disposal programs.

• $125 million for the Washington sewer system.

• $150 million for Smithsonian museum facilities.

• $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.

• $75 million for "smoking cessation activities."

• $200 million for public computer centers at community colleges.

• $75 million for salaries of employees at the FBI.

• $25 million for tribal alcohol and substance abuse reduction.

• $500 million for flood reduction projects on the Mississippi River.

• $10 million to inspect canals in urban areas.

• $6 billion to turn federal buildings into "green" buildings.

• $500 million for state and local fire stations.

• $650 million for wildland fire management on forest service lands.

• $1.2 billion for "youth activities," including youth summer job programs.

• $88 million for renovating the headquarters of the Public Health Service.

• $412 million for CDC buildings and property.

• $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.

• $160 million for "paid volunteers" at the Corporation for National and Community Service.

• $5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration.

• $850 million for Amtrak.

• $100 million for reducing the hazard of lead-based paint.

• $75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies.

• $110 million to the Farm Service Agency to upgrade computer systems.

• $200 million in funding for the lease of alternative energy vehicles for use on military installations.

What GOP Leaders deem wasteful in Senate stimulus bill - CNN.com

Keep in mind that this list was compiled right after the stimulus was passed, and many more pork projects have been discovered since.

 

[political_signs]

Today, The Wall Street Journal reported:
- The stimulus increased the number of employed persons by 1.4 million to 3.3 million
- The stimulus increased the number of full-time equivalent jobs by 2.0 million to 4.8 million vs. what would otherwise have been the case

this is a good thing! finally a substantial change is finally being noticed. although i do agree with some on this thread there are still too many who are unemployed... but this will change as time goes by. i predict that by next year things will be looking a lot better ;]

 

[Harry Guerrilla]

Today, The Wall Street Journal reported:



Stimulus Boosted Jobs in 2nd Quarter, CBO Says - WSJ.com

For those who are interested, the full CBO report can be found at:

http://www.cbo.gov/ftpdocs/117xx/doc11706/08-24-ARRA.pdf

Note: One may have to cut and paste the CBO's URL in one's address bar in order to access the report.

CBO's estimates of the stimulus plan's effects in 2010 Q2 were:

- The stimulus raised real GDP by 1.7% to 4.5%
- The stimulus lowered the unemployment rate by 0.7 percentage points to 1.8 percentage points
- The stimulus increased the number of employed persons by 1.4 million to 3.3 million
- The stimulus increased the number of full-time equivalent jobs by 2.0 million to 4.8 million vs. what would otherwise have been the case

In any case, this latest assessment should provide ample ammunition for a continuation of the debate concerning what contribution the economic stimulus made.

Are we sure it isn't just the spring stimulus that happens every year?

AKA, tax refunds.

 

[Boo Radley]

That, and what percentage were public sector and private sector jobs is the reason I read the report in the first place. To my disappointment no such figures were given, because obviously they were not requested to obtain that information.

.

How is it obvious?

 

[j-mac]

As long as the CBO is only allowed to use Keyensian economists to formulate its conclusions it will always be skewed.

I'd like to see a report with a more narrow window of what was supposedly created in jobs, as opposed to the aggregate number of unemployment claims for the same period. I bet it'd be a net loss.


j-mac

 

[Grim17]

this is a good thing! finally a substantial change is finally being noticed. although i do agree with some on this thread there are still too many who are unemployed... but this will change as time goes by. i predict that by next year things will be looking a lot better ;]

Let me point out once again, this excerpt from the report:

Although CBO has examined data on output and employment during the period since ARRA’s 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.

What this report can not tell you is, how many jobs would have been created in the economy over the last year and a half if the stimulus was never passed. Without that information, those numbers are meaningless.

 

[Grim17]

How is it obvious?

It's obvious because it isn't contained in the report. If it were requested, it would be there.

 

[Boo Radley]

It's obvious because it isn't contained in the report. If it were requested, it would be there.

OK. My mistake. I miss read.

 

[j-mac]

So we are on the path to lollipops and sunshine? Well, not so fast people.....

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.



Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response."

"Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times," he said.

News Headlines

j-mac

 

[political_signs]

okay wow... so didnt see your cnn list there GRIM17 uhhh well some of the things on that list are really essential. the whole going green thing im so for it. it helps out the environment as well as the wildland fire management on forest service lands. gotta keep the forests alive somehow.

$75 million for "smoking cessation activities."

idk even know what it is nor am i going to google it. it just sounds retarted.

$600 million to buy hybrid vehicles for federal employees.

wow... really? really? well at least we save more money then the government spending money on gas so theres a lot more money back in the pocket ;]