Monday, September 14, 2009
Media sources reported last week what the White House had hoped they would regarding the federal stimulus plan adopted earlier this year: that one million jobs had been created or saved as a result of the billion-dollar American Recovery and Reinvestment Act (ARRA). However, a closer examination of the report from which this employment statistic came raises some questions as to just how solid the figure really is.
Upon reviewing the Council of Economic Advisors’ report, ProPublica noted that the White House’s top economists admitted that, “Any estimates of the impact of the ARRA at this early stage must be regarded as preliminary,” and any facts subject to “substantial uncertainty.”
The uncertainty stems from several sources. First off, the report was based on a comparison with a purely hypothetical alternative—that is, the results of having no stimulus plan at all. Second, only six months has passed since Congress approved the ARRA, which is not a long time in the macroeconomic world economists work in.
Also, media outlets like the Associated Press and Bloomberg News failed to note in their stories about the White House report that it gave a range of jobs created/saved. “Employment is estimated to be between 600,000 and 1.1 million higher than it would otherwise have been,” concludes the report. However, many media sources only used the high end of the estimate.
-Noel Brinkerhoff
Has the Stimulus Really Created or Saved One Million Jobs? (by Christopher Flavelle, ProPublica)
The Economic Impact of the American Recovery and Reinvestment Act of 2009 (Executive Office of the President Council of Economic Advisers) (PDF)
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