So the stimulus didn't keep unemployment to 8%

My chart this week: unemployment vs expectations once the $787 billion Obama stimulus plan was implemented.

Can’t blame this on W. anymore.

The stimulus and unemployment

The stimulus and unemployment

I will add that even if the 10.2% level recorded in October marks a peak, joblessness is unlikely to come down anytime soon: The workweek averages only 33 hours. Employers can simply extend hours to ramp up production.

But don’t worry. Congress is planning another stimulus bill.

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4 thoughts on “So the stimulus didn't keep unemployment to 8%

  1. What’s your point? Do you think that unemployment would have been less if there had been no stimulus? That’s ludicrous. If the previous figures seriously underestimated the drag on the economy with the stimulus, without the stimulus the likely unemployment today would be at least 11%. But even worse, with no action to stop the bleeding, the economy would have continued its nosedive. You may not like what was done, but it’s clear that doing nothing would have been far worse.

    • The administration set a specific goal for the stimulus package and sold it to taxpayers based on that goal. Seems fair enough to judge it using its own yardstick.
      Further, the Administration claims that the stimulus package either created jobs (650,000) or saved several millions Those claims are in fact impossible to prove (http://online.wsj.com/article/SB10001424052748703932904574509341078005538.html). In my view, the stimulus and other efforts to right the economy have been poorly directed. Programs like cash-for-clunkers or the tax credit for first time homebuyers are expensive and effective, at best, only on the margin. http://www.ritholtz.com/blog/2009/10/cash-for-clunkers-cost-how-much/
      If the government wishes truly to effect job creation, then it should focus on providing more credit to small businesses — the real growth engine of the economy. The government has poured gazillion dollars to subsidize lending. TARP beneficiaries have pulled backed on credit and are making it more difficult for small businesses to borrow and grow. So now we need another program to accomplish what the first set of programs failed to do.

      • I agree with Misterb. The stimulus wasn’t perfect (what is?) but it did clearly help.

        The 8% forecast was amazingly dumb. I don’t know what they were thinking. And they should get some blame for that.

        The gazillion dollars of TARP, etc. are another story. Not part of the stimulus and definitely a Bush/Paulson initiative. Arguably they were needed (some of it, at least) but it is hard to blame it on someone who was the junior senator from Illinois.

        Not that Obama/Geithner have been anywhere near perfect, but the rise in unemployment was inevitable when Obama took office (despite the boneheaded forecast). Again, the administration’s estimate for the impact of the stimulus is undoubtedly biased upward (as has every administrations excluding, perhaps, Jimmy Carter).

        Of course, it is impossible to “prove” any claims about the stimulus but the impact was clearly positive (and only 1/2 of it has been spent).

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