A new Congressional Budget Office analysis, which we’ve briefly summarized here, finds that the Recovery Act is continuing to save jobs and protect the economy from what would have been a much worse recession. As of March, the Recovery Act had:
increased real GDP by as much as 4.2 percent,
saved or created as many as 2.8 million jobs,
boosted the number of “full-time-equivalent” jobs by as many as 4.1 million, both by saving jobs and by boosting the number of hours worked. (Without the Recovery Act, many full-time workers would have been reduced to part-time status and fewer would have worked overtime.)
These findings are broadly consistent with the conclusions of other leading economic forecasters, including Mark Zandi of Moody’s Economy.com (see Tables 6 and 7 in this report) and Macroeconomic Advisers.
Once the recession hit, it was impossible to avoid all the pain it caused, but of the policy options available, the Recovery Act was a wise approach. It increased the paycheck of nearly every worker in the country — and because people had more income, they spent more, helping businesses save jobs. It got money into the hands of unemployed workers and others who would spend it quickly to meet their basic needs, which also helped sustain consumer demand. And it helped states save the jobs of teachers, police officers, and other public employees, preserving public services and boosting demand at the same time.
Still, the economic recovery remains fragile. That’s why extending some of the Recovery Act provisions CBO has found are most successful in stimulating the economy — like aid for unemployed workers and cash-strapped states — will save jobs and help keep the economy moving forward.