Economic Policy Institute: Obama Recovery Act Created Or Saved 720,000 Jobs In Second Quarter

[Omaha Steve]

http://www.laborradio.org/node/11647

By Doug Cunningham

The billions of dollars in economic stimulus money in President Obamaa’s economic recovery package created or save 720,000 jobs in the second quarter of this year. That’s according to an analysis by the Economic Policy Institute. EPI economist Josh Bivens says although the economy continued to shrink during that quarter it would have been much worse without the recovery act.





http://www.epi.org/analysis_and_opinion/entry/gdp_preview_the_parachute_deploys_as_recovery_act_takes_hold/

GDP Preview: The parachute deploys as Recovery Act takes hold
By Josh Bivens 07-29-09

A July 31 Commerce Department report is expected to show that the U.S. economy contracted at a 1.5% annualized rate in the second quarter of 2009, according to a consensus of Wall Street economists polled by Dow Jones Newswires. If their forecasts are accurate, it would be a substantial improvement over the previous six months, when the economy contracted four times as fast - at a 6% annual rate.

A substantial portion of the improvement registered in the second quarter can be attributed to the effects of the American Recovery and Reinvestment Act (ARRA). Both Goldman Sachs and Mark Zandi of Moody’s Economy.com have estimated that ARRA added approximately three percentage points to growth in the second quarter. Both of these estimates are confirmed by the Economic Policy Institute’s own calculations.

A second quarter annualized GDP contraction of 1.5%, instead of the 4.5% contraction that would have occurred without the Recovery Act, translates into approximately 720,000 jobs that were created or preserved as a result of the ARRA. Given that actual job loss in April, May, and June of this year totaled 1.3 million, this means that job loss would have been more than 50% higher without the moderating influence of ARRA.

Essentially, most forecasters assume that were it not for stimulus funds provided under the Recovery Act, the economy would have continued to contract during the second quarter of 2009 at a rate roughly in line with the previous six months. A GDP report showing a notable slowing in the rate of contraction would indicate that the recovery package is working at least as well as expected, and perhaps even a bit better. Goldman Sachs has actually revised upwards its expectation of ARRA’s effect on second quarter growth, given that its implementation has been faster than initially expected.

Unfortunately, the overall economy is in much worse condition than what was anticipated at the start of the year, when the Recovery Act was being crafted to create or save roughly 3.5 million jobs. Between President Obama’s election (when the debate over a recovery package began) and the signing of ARRA into law in February, roughly 2.7 million jobs were lost. This means that the underlying deterioration of the economy was so rapid that it swallowed the equivalent of 80% of the positive jobs effects of ARRA in the four months before its enactment.

FULL story at link.