One Year Of US Stimulus: Reason to Celebrate?
Happy Anniversary! Well, sort of.
Even for supporters of the American Recovery and Re-investment Act, the one-year anniversary of it being signed into law might not be a time for celebration -- at least not yet.
In the last 12 months, unemployment has gone from 7.7-percent to 9.7. Even if the recovery Act has funded 2-million jobs, millions more have been lost.
"I think most of the Recovery Act has been a bust," Deutsche Bank economist Joe Lavorgna told CNBC. "With respect to job creation, most of the relevant improvement has been in residential construction, another sign that the recovery did not work as advertised.
"Non-residential construction, which is where most of the shovel-ready workers would be hired, has continued to show NO meaningful pickup in its year-over-year trend."
On the other side of the stimulus coin, the White House clearly contends that the U.S. economy would be in a much darker place had it not been for the $787-billion package.
"When ARRA was passed, the economy was in freefall," according to Vice President Joe Biden's official report to President Obama on the first year of stimulus. "Job numbers were plummeting, and unemployment rolls were expanding. More and more Americans were losing their jobs and the country was in need of a jumpstart. ARRA has provided just that."
Here are some of the key numbers to date.
The $787-billion has been adjusted by the Congressional Budget Office. It is now the $862-billion Recovery Act.
According to the Vice President's report, through January, about $453 billion in spending and tax cuts had been obligated. Keep an eye on language; "obligated" does not mean "outlayed" or even "spent".
The White House's goal is to disburse 70-percent — or more than $550-billion — by the end of September.
"We are on track to achieve this goal," Biden wrote to the President.
To reach that goal, outlays and taxes must go out the federal door at the pace of $32-billion a month. That's $5-billion above the current pace.
Key projects that have seen major awards thus far:
- Weatherization: $ 5 billion
- High-speed rail: $ 8 billion
- Smart grid: $ 1.6 billion
- Key projects to come:
- Health IT: $ 19 billion
- Broadband: $ 6.9 billion
In all, cutting through all the confusing numbers, about one-third of the whole package is spoken for. That means 2010 should show more stimulus-driven strength in the U.S. economy.
"What matters for growth is the pace of the stimulus spendout, which surged from nothing at the beginning of 2009 to almost $100 billion by the fourth quarter," wrote Mark Zandi of Moody's Economy.com. "That is a big change in a short period. The infrastructure spending funded by the stimulus has been slow to get started, but projects are now gearing up and will provide a meaningful source of growth this year."
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