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A Project of The Annenberg Public Policy Center

Stimulus Jobs: The Fine Print

The White House announced April 14 that a new report shows that the Recovery Act has been responsible for 2.2 million to 2.8 million jobs through the end of March. As always, we advise reading the fine print.

As we’ve written before, it’s not possible to know what might have happened had the $787 billion economic stimulus bill not been enacted and signed into law more than a year ago, on Feb. 17, 2009. Economists can only estimate. In this case, the president’s Council of Economic Advisers issued a 40-page report, using two different approaches. One produced an estimate of 2,825,000 jobs gained or saved as a result of the stimulus. The other produced a figure of 2,223,000. (Table 7, page 17).

Now for the fine print. As the CEA report candidly notes, any estimate of this sort can be way off:

CEA, April 14: [M]easuring what a policy action has contributed to growth and employment is inherently difficult because we do not observe what would have occurred without the policy. Therefore, it must be understood that our estimates are subject to substantial margins of error.

The president’s economists said they are confident that their basic conclusions are solid because "a wide range of private and government analysts concur with our estimates." Do they? The CEA report cites five other estimates — but only one of them falls into the range estimated by the White House economists.

According to the CEA report, the nonpartisan Congressional Budget Office estimates that through March 30 the jobs effect could be as high as 2.7 million — just below the highest of the two White House estimates. But the CBO also estimates that the effect could be as low as 1.2 million — a full million below the lower of the two White House figures.

As for private economists, all those cited by the CEA were well below the range estimated by the White House. Mark Zandi, of Moody’s Economy.com, put the number at 1,896,000, IHS/Global Insight put it at 1,707,000 and Macroeconomic Advisers estimated 1,462,000.

We won’t hazard any guesses about which estimate is closest to a number than can’t ever be known with certainty. But we can say the latest White House estimates are on the high end of what others project.