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Stimulus Worked

In my post this week for US News & World Report, I highlighted Congressional Budget Office (CBO) Director Doug Elmendorf’s response at a recent congressional hearing to those who wanted to paint the 2009 Economic Recovery Act (a.k.a. the stimulus measure) as a failure:

“Our position is that the [2009] Recovery Act was not a failed program. Our position is that it created higher output and employment than would have occurred without it.”

The two charts below from our chart book, “The Legacy of the Great Recession,” illustrate CBO's estimates of the success of the Recovery Act — officially, the American Recovery and Reinvestment Act (ARRA) — in keeping real (inflation-adjusted) gross domestic product (GDP) from falling more and the unemployment rate from rising more than they did.

CBO provides a range for the likely impact of ARRA, but as I explain in the US News post, there is good reason to think that the actual effect has been closer to CBO’s high estimate than its low estimate.

Stimulus did indeed work.