Fed Spending Credited With Stemming Job Loss

ARRA report coverWhile cautioning that the numbers are preliminary and the analysis is subject to revision, the White House issued a report today taking credit for adding or saving at least 1.5 million jobs in 2009 and turning around the recession.

Issued by the Council of Economic Advisers, the report says that after Congress adopted the President’s almost $800 billion recovery plan early last year “the trajectory of the economy changed materially toward moderating output decline and job loss.”

The report credits the American Recovery and Reinvestment Act of 2009 with lifting the country’s gross domestic product by at least a couple of percentage points in most of the last three quarters of 2009 and between 1.5 and three points in the fourth quarter.

As for jobs creation, the report says: “For the third quarter of 2009, we now have direct reports on jobs created or saved from a subset of recipients of ARRA funds. These reports identify 640,000 jobs that would not have existed but for the Recovery Act.”

Payroll Change By QuarterAttempting to separate the impact of the Recovery Act from secular improvements that would have occurred anyway is difficult, the economic advisers acknowledge. So in preparing the report they compare the periods prior to implementation to the three quarters since the recovery spending began. Other, non-government analytics were also taken into account.

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Overall, says the report, the actions of the federal government were an important factor in stemming job loss.

“As with real GDP, the timing of the change in employment behavior is suggestive of a key role for the ARRA and other stabilizing measures taken in February and March,” the advisers write, “Job losses moderated in the quarter after Recovery Act spending and tax cuts began. They then continued to slow greatly in the subsequent two quarters.”

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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12 Comments on “Fed Spending Credited With Stemming Job Loss

  1. “It is important to acknowledge once again that three quarters is a short period of time for macroeconomic analysis. The only official GDP data that we have under the program are for the second and third quarters of 2009. Two observations, while
    obviously instructive, are not enough to reliably identify a trend.”

    I don’t think reporting figures of 2 quarters is data which can boost confidence. Whilst the report states that job losses moderated in the quarter after RA spending began it’s hardly indicative of true stabilisation.

    A question: how does this report compare with the BLS reporting?

  2. In addition to the jobs created or saved in the public sector, we also have to factor in the similar and equally important outome in the new ZIP codes and Congressional districts none of us even new existed.

    It’s a testament to the talents of the “best and brightest” in the current administration that, as a team, they can enhance employment in parts of the nation they themselves created for that express purpose.

    Inspired by this, I am adding to my website 2 new virtual searches I’ve been retained to conduct for 2 new phantom clients. I have submitted this information to the Bureau of Labor Statistics. I will repost here when I am suitably credited with doing my part to move the ball forward.

  3. the BLS numbers are claptrap- the birth/death model is especially silly and will cause major downward revisions in future periods.

    Likewise ‘stimulus’ can’t create demand, it can only pull it forward from future periods. I think there are appropriate times for stimulus and I think this was one of them, and it was somewhat effective, but the language used is misleading and the whole thing fails if when that future period arrives the economy is not strong enough to absorb the demand shift burned in the stimulus.

    Out problem is one of values and under-taxing of the very highest income earners.

    We had ultra high tax rates for top earners in the 1945-1973 period with generally good growth and investment. Exessive personal earnings at the top are spent badly and come from rewards that should belong to shareholders, hence the absurd spread btween exec and worker pay that has developed here.

    I’m fine with paying Shaq 25 million to put a ball in a hoop, but 20 million of it should go back to the public who makes it possible.

  4. Martin, I have no issue with TARP and the stimulus . . . the smartest guys in the room were scared to death so I can go with their decision. But they made a mistake back-ending the stimulus . . .70% has yet to be spent.

    So if we think the economy is picking up, why are we going to spend it now?

    ANS: State and local governments would be the next layer of job cuts and this will stop government layoffs.

    As for raising Shaq’s taxes, I don’t want them raised because after they go after Shaq, they go at the next layer underneath him and the one after that and the one after that.

    And, I must in all candor tell you that having spent time in government when I was younger, I don’t them getting any mworker ore money. I want them cutting expenses just like the private sector has to do during these times, rather than increasing spending to pay for employee benefits that far exceed those in the private sector and a host of other excesses.

  5. “We had ultra high tax rates for top earners in the 1945-1973 period with generally good growth and investment.” Maybe..actually until 1981-2 but the tax loop holes were huge and numerous back then too. Most of those are closed firmly now. Higher taxes on the so called rich will hurt more now.

  6. Actually SOME private jobs have been ‘saved’. Just spoke to a guy last night who runs an environmental services firm in Florida, he says the fed work is a) keeping his company alive b) the feds called him and asked if any jobs had been ‘saved’. He said “no” because he hates Obama and socialism…… welcome to America 2010.

    Jeff I retch a little everytime someone says ‘I can’t run deficits like the government does’ or ‘families know they have to live within their means’ because they are not like items…when was the last time families had to go to war, conduct basic research, or house/feed/educate a dozen unrelated people ?

    Deficits are fine as long as they are offset by surplus at some point….economists can’t even agree that it would be a good thing for the government to be in the black for very long…..

    Our problems are on the revenue side (mostly) with bad incentives up the line for shareholders to get drilled, which is the usual story these days……

  7. Martin, as you know, the remarks that make you retch are not mine. What makes me wretch is when someone says, “The government is here to help you,” because, with very very few exceptions, that has not been my experience. And, when it has occurred, I have seen unintended consequences of their “help.”

    And I know those are not your words either.

  8. Jeff I do believe that the United States government over the last 200+ years has been the greatest single force for the good of makind in the history of the world. I would say that puts us in different idea-spaces…..

  9. From a foreign policy perspective, we have agreement.

    From a social perspective (certainly on a day celebrating the achievements of Dr. King)it is easy to acknowledge that iy has contributed mightily.

    From an economic perspective, I have found that in the last 20 years, there have been many instances where it has choked the golden goose and, like the old Soviet Union, used five year plans to implement policy that have failed to achieved goals at great expense.

    And, I look at some of the pronouncements of President Obama and certainly see much overreach from him.

    Respectfully,

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