CBO Unveils Report on Economic Impact of ARRA During Q2/2010
The American Recovery and Reinvestment Act of 2009 (ARRA) was enacted by Congress on February 17th, 2009. The ARRA is more commonly referred to as "The Stimulus" or "The Recovery Act".
The primary goals of the Act were to create jobs and encourage investment and spending during one of the worst recessions in the last 100 years. Did it work?
The CBO (Congressional Budget Office) released a report earlier this week titled "Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from April 2010 through June 2010". The CBO is a non-partisan government agency that has the task of providing economic data to Congress.
Anyways, the report included a number of interesting pieces of information, including:
-the ARRA will have increased budget deficits from the 2009-2019 period by $814 billion, up from an original estimate of $787 billion. The majority of this amount (about 70% according to the CBO) will have been spent during the 2009 and 2010 fiscal years
-during Q2/2010, ARRA funded "almost 750,000 full-time-equivalent (FTE) jobs"
-the ARRA raised real GDP by between 1.7% - 4.5% in the second quarter of 2010
-the ARRA lowered the national unemployment rate by between 0.7%-1.8% in the second quarter of 2010
-the ARRA increased the number of people employed by between 1.4 million - 3.3 million during Q2/2010
-"increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise"
In regards to the future impact of the ARRA, the CBO had this to say:
"the effects of ARRA on output are expected to gradually diminish during the second half of 2010 and beyond. The effects of ARRA on employment and unemployment are expected to lag slightly behind the effects on output; they are expected to wane gradually in 2011 and beyond"
If these numbers are anything close to being true, then it's kind of scary to consider that the effects of this stimulus will "gradually diminish" during the second half of 2010 and beyond. I mean, the national unemployment rate is already close to 10 (9.5% at the moment) and GDP estimates are being slashed on an almost daily basis.
The big question - was implementing the American Recovery and Reinvestment Act of 2009 the right move for the country?
Source: CBO.gov - Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From April 2010 Through June 2010
Filed under: General Knowledge