As required by law, CBO prepares regular reports on its estimate of the number of jobs created by the American Recovery and Reinvestment Act of 2009 (ARRA), which was enacted in response to significant weakness in the economy at that time. In its latest report, issued this afternoon, CBO provides estimates of ARRA’s overall impact on employment and economic output in the third quarter of calendar year 2011, as well as over the entire period since February 2009.
CBO develops estimates of ARRA’s effects on output and employment by looking at recorded
spending to date along with estimates of the other effects of ARRA on spending and revenues, by using evidence about the effects of previous similar policies, and by drawing on various
mathematical models that represent the workings of the economy. Using such analysis, CBO estimates that ARRA’s policies had the following effects in the third quarter of calendar year 2011 compared with what would have occurred otherwise:
Those ranges reflect the substantial uncertainty that surrounds the broad economic effects of such policies and a range of economists’ views about the magnitude of those effects.
In contrast, recipients of some ARRA funds reported that those sums supported about 400,000 FTE jobs during the third quarter of calendar year 2011. In CBO’s view, those reports do not
provide a comprehensive estimate of the law’s impact on U.S. employment for several reasons,
which are discussed in CBO’s report and in a previous
The effects of ARRA on output peaked in the first half of 2010 and have since diminished, CBO estimates. The effects on employment are estimated to lag slightly behind the effects on output; CBO estimates that the employment effects began to wane at the end of 2010 and have continued to do so throughout 2011.
In total, CBO estimates that the legislation will increase budget deficits by about $825 billion over the 2009–2019 period. By the end of September 2011, nearly 90 percent of ARRA’s
impact on federal spending and revenues had occurred.
Still, CBO estimates that, compared with what would have occurred otherwise, in 2012 ARRA
CBO’s current estimates differ in several regards from its previous estimates:
This report was prepared by Felix Reichling of CBO’s Macroeconomic Analysis Division.