CBO Report Gauges Stimulus Impact

A recently released report from the Congressional Budget Office has concluded that the 2009 stimulus package has, so far, had an overall positive impact on the nation’s economy, being directly responsible for increases to both the gross domestic product and job growth. The CBO came to its conclusions by looking at total spending to date as well as “estimates of the other effects of [the stimulus] on spending and revenues.” The report’s data pertains specifically to the first quarter in 2010.

According to the report, the stimulus has:

• 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.)

These effects, said the report, are expected to intensify throughout the calendar year but will then begin diminishing in 2011 and will fade completely by the end of 2012.

The report includes a number of caveats regarding the information it contains. The report noted that some of the jobs reported as created by the stimulus package may have been formed regardless of whether or not it had been in play. In addition, some jobs might not have been recorded since stimulus recipients only needed to report jobs created directly by them or by immediate subcontractors, which leaves out potential lower-level subcontractors who may have benefitted. Also, the data doesn’t account for jobs that may have been created as an indirect result of the stimulus package, such as if greater income for recipients and their employees boosted demand for products and services. Finally, the report warns that recipient reports cover only one sixth of total stimulus fund appropriations; the data doesn’t measure other provisions of the stimulus, such as tax cuts and transfer payments.

The report also says that a definitive picture of how the stimulus affected the economy would require knowing exactly how the economy would have turned out had it never been enacted. Because this path cannot be observed without the aid of time travel, there’s no way to be truly certain and data on its actual performance “add only limited information about [the stimulus’s] impact.”