RISMEDIA, January 18, 2010—(MCT)—The Obama administration, offering evidence that its much-maligned efforts to spur economic recovery have begun to take hold, estimated recently that the $787 billion stimulus program saved or created 1.5 million to 2 million jobs during 2009.
These latest calculations by the White House Council of Economic Advisers are certain to be challenged, but the employment and economic impact of the stimulus cited in the new report are generally in line with estimates by some leading private economists as well as the nonpartisan Congressional Budget Office.
“This is truly a stunning effect,” Christina Romer, chairman of the president’s Council of Economic Advisers, said in a conference call with reporters. She expressed confidence that the package of tax cuts and government spending—the largest of its kind in American history—would ultimately fulfill Obama’s promise to boost employment by 3.5 million jobs by the end of 2010. As of the end of last year, only one-third of the $787 billion package had been spent, although about one-half of the total has been used or committed.
Even with the stimulus, the American economy lost more than four million jobs last year, including another 85,000 in December 2009, according to Labor Department statistics. And the unemployment rate last month was 10%—a figure that is widely expected to inch higher in the months ahead.
In their first quarterly report to Congress on the stimulus, issued in September 2009, White House economists estimated that the Recovery Act had raised employment levels by more than 1 million jobs as of the third quarter. The new report reflects actual data submitted by stimulus recipients indicating they had created or saved 640,000 full-time equivalent jobs as of the third quarter. But the White House’s estimate of stimulus-induced jobs for 2009 are based on economic modeling and projections, and as such, are likely to be met with considerable skepticism from those who have not only questioned the methodology but documented cases in which stimulus money went to dubious projects.
In their first quarterly report on the stimulus, issued in September, White House officials estimated that the package raised employment levels by more than 1 million jobs. The new report incorporates data from stimulus recipients who said they saved or created 640,000 jobs as of the third quarter. Romer acknowledged that it was hard to make employment-creation claims when the economy has shed about eight million jobs in the last two years. But she noted that job losses had declined dramatically since the first quarter, when they were approaching nearly 700,000 a month on average—far more than the approximately 69,000 a month lost during the fourth quarter of last year. Without the stimulus, Romer said, the economy would be as many as 2 million more jobs in the hole today.
In the same vein, she said, without the benefits of the stimulus, the economy would have shrunk instead of growing 2.2% in the third quarter. The report estimates that the Recovery Act added 1.5 to 3 percentage points to gross domestic product growth in the fourth quarter—which is also in line with professional forecasting firms such as Moody’s Economy.com and IHS Global Insight. Many economists expect fourth-quarter GDP to show growth of 4-5% at an annualized rate.
Even so, employers have been reluctant to create jobs. And economists widely expect GDP growth to slow this year, prompting calls for additional government stimulus. Although the Obama administration has been reluctant to propose another large-scale spending plan, amid sharp criticisms from deficit hawks, it is considering various ideas aimed at stimulating job growth, such as tax credits for hiring and help for small businesses and certain potentially big employment producers such as green energy.
The latest report shows that the stimulus has been slow to create so-called “clean energy” jobs, which include wind and solar power generation, energy-efficiency retrofits and building high-speed rail. Obama has made clean-energy job creation a centerpiece of his vision for job growth. Though the Recovery Act includes $90 billion for clean-energy programs, only $5 billion has been spent so far—with nearly half that spending coming in the form of tax breaks for renewable electricity generation and other areas. Barely 5% of the $20 billion earmarked for efficiency and 5% of the $26 billion tagged for renewables have been spent.
The CEA report blames the green job lag on the time-consuming process necessary to identify and evaluate potential recipients. The report said “most of the clean energy investments occur through grants and contracts that require that proposals be reviewed before funds are expended.” In total, the $5 billion clean-energy spending so far has created or saved about 50,000 jobs directly, a roughly $100,000-per-job expense. The White House estimates the clean-energy spending will end up bankrolling the equivalent of 720,000 jobs lasting one year each by 2012.
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