US GDP would have been negative at the end of 2009 and unemployment would be well over the current 10-percent, if not for the $787 billion Recovery Act, according to the Council of Economic Advisors.
"We found that in the third quarter the Recovery Act added 3-4 points to real GDP and from 1.5-3 in the fourth quarter," said Christina Romer, who chairs the CEA. "Without the Recovery Act, we would have been negative in Q4."
The CEA released its second quarterly report on the economic impact of the Recovery Act early Wednesday.
(Read the report here).
On a conference call late Tuesday night, Romer was clear that the $787 billion stimulus package has been instrumental in turning around the economy – even if the actual numbers remain unclear.
"None of us have a crystal ball," she said of the economic analysis done by the CEA, which consists of three members nominated by the President and approved by the U.S. Senate. "I stand very much behind these numbers. Of course there’s uncertainty, that’s why there’s a range of estimates. By the end of next year, we will have saved or created 3.5 million jobs."
Ironically, on the topic of jobs, during the conference call with reporters, Romer was asked about the Recovery Board’s shift away from calculating jobs "created or saved".
"Close to 2 million jobs have been created or saved through the Recovery Act," she said, adding that the 640,000 number given on recovery.gov was more of a guide. "We looked at those numbers and looked at them as a check."
But late in 2009, there was a firestorm of criticism when recipient reporting numbers were first released. Remember the jobs created/saved in non-existent counties? Jobs created by a lawnmower purchase?
In a memo last month, it was decided that, moving forward, any job related to Recovery Act funding would be counted – even if that job was never in jeopardy of being lost.
"Recipient reporting is only about 35 percent (of job creation)," said Romer, referencing the fact that the 640,000 number — in terms of jobs saved or created — relates only to contract money from the Recovery Act. It does not include the benefits of things like the billions of dollars in tax cuts.
Either way you count the numbers, Romer believes the worst is behind the U.S. economy and that the CEA report affirms that.
"We do anticipate positive job growth by spring," she said.
Again, there is another side to the rhetoric because Romer, despite touting the Recovery Act’s successes, contends that more government spending is necessary to spur job growth.
"I absolutely do feel we need targeted action to spark job creation," said Romer, who deferred to President Obama rather than discuss specifics of a possible plan.
Romer also referenced the biggest concern in the overall recovery equation: The private sector.
"There is uncertainty about where the economy is going," she said. "When will the private sector take over?"
It’s a good question, and one that even all the economic analysis could not answer.