White House Says Stimulus Has Saved 1.1 Million Jobs
President Barack Obama’s $787 billion fiscal stimulus program has created or saved as many as 1.1 million jobs since its implementation in February, the White House said today.
The stimulus added 2.3 percentage points to gross domestic product in the second quarter, the Obama administration said today in its first quarterly report to lawmakers in Washington on the economic impact of the program. The White House said it expects the stimulus to add up to 3 percentage points to growth in July through September.
Unemployment is forecast to rise even as the economy starts to recover from its deepest recession since the 1930s. The stimulus package aims to stabilize the economy through tax cuts and infrastructure spending and creating or saving about 3.5 million jobs.
“We think we are on track” to achieve that goal, Christina Romer, chairman of the White House Council of Economic Advisers, said today in a conference call with reporters.
The administration’s figures were met with skepticism from Republicans in Congress, who noted that 2.4 million jobs have been lost since March.
“How can anyone tell the American people with a straight face that the more than 2 million jobs that have been lost since the stimulus was enacted is actually 1 million jobs ‘saved or created?’” Senate Republican Leader Mitch McConnell of Kentucky said in a statement.
Payroll Cuts Peak
Since the slump began in December 2007, the U.S. has lost 6.9 million jobs. Payroll cuts peaked at 741,000 in January and have since subsided, with 216,000 job losses in August, according to the Labor Department. The jobless rate rose to 9.7 percent in August, a 26-year high, from 9.4 percent.
John Makin, a visiting scholar at the American Enterprise Institute in Washington, questioned the assumptions used to measure the impact of the stimulus.
“They can say whatever they want, and they have,” Makin said.
Separately, Treasury Secretary Timothy Geithner said the government is moving to withdraw some of its support for financial markets, while cautioning that the recovery will have “more than the usual ups and downs.”
The jobless rate will increase next year to 10.2 percent before falling to 9.1 percent in 2011, the Congressional Budget Office forecast last month.
“The fiscal stimulus is still ramping up,” Romer said when asked about the need for a second stimulus package. She added that the administration will re-evaluate “the trajectory” of the program as early as December to determine if further measures are needed.
New Phase
“As we enter this new phase we must begin winding down some of the extraordinary support we put in place,” Geithner told the Congressional Oversight Panel that monitors the $700 billion Troubled Asset Relief Program.
The world’s largest economy contracted 1 percent from April through June, according to the Commerce Department. The drop was the fourth in a row, making it the longest contraction since quarterly records began in 1947.
“The economy is obviously still far from healthy,” the CEA said in today’s report. Economists surveyed by Bloomberg News forecast growth of 2.2 percent for the current quarter.
The Federal Reserve yesterday said 11 of its 12 regional banks reported signs of a stable or improving economy in July and August.
The labor market “remained weak across all districts,” while some regions reported an “uptick in temporary hiring and a decline in the pace of layoffs,” the Fed said in its Beige Book business survey, published two weeks before officials meet to set monetary policy.