Is the economic stimulus package helping the economy?
Just six months after Congress enacted the largest economic stimulus plan in history of the United States, analysts and government officials agree that the desperate measure seems to have contributed in a major way to what most economic brains are calling a “budding recovery”. Don’t pencil in Obama in 2012 just yet — apparently there are significant concerns about a steadily rising unemployment rate and what the impact of the economic stimulus may be to the ever increasing federal budget deficit.
While President Obama and his staff are still under fire for what critics are calling “unrestrained spending” (and in the face of poll data suggesting that Americans are at best ambivalent about the real impact of Obama’s stimulus plan) the cabinet and other officials are attempting to point out the highlights of the stimulus — for instance, claiming that Obama’s stimulus package may have been the single instrument of recovery.
For his part, Vice President Biden made a speech on Thursday highlighting the impact on our economy of the now $787 billion economic stimulus spending package. “The Recovery Act has played a significant role in changing the trajectory of our economy and changing the conversation about the economy in this country,” Biden said at the bipartisan Brookings Institution. He went on to say that “Instead of talking about the beginning of a depression, we are talking about the end of a recession.” Snappy language that should stick in people’s heads for some time to come.
With congressional Republicans on the attack (even in the face of evidence proving that Obama’s plan is working) many citizens are still doubtful that any success has occured, even though economists are in agreement that the package has in fact performed a significant role in staving off a depression, and probably even getting us out of a nasty recession. On the other hand, those same economists seem uncertain about how big that impact has been and whether or not it will last.
One major economic consulting firm, IHS, estimates that the economic stimulus package has increased the 2009 gross domestic product by about 1 percent over what it otherwise would have been. That one percent benefit has mainly come during the second half of the year. That same firm has forecast that Obama’s economic stimulus package will result in the creation of about 2 million more jobs than we would have seen at the end of 2010.
Don’t get too excited — even as the economy shows some signs of improving, labor markets and unemployment numbers are still depressed. Unemployment sits at 9.4 percent, though it missed the double digit mark many feared. Just hours before Vice President Biden spoke, the Labor Department released information that another 570,000 people filed their new unemployment claims just last week. This number has been consistent from week to week.