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Economists say stimulus created nearly 3 million jobs

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A recent study generally confirms the White House's claim that the economic stimulus package passed by Congress in 2009 boosted employment by 2.5 million to 3.6 million jobs and raised the U.S.' annual economic output by almost $400 billion, according to USA Today.

The study, which was conducted by Mark Zandi, chief economist for Moody’s Analytics, New York, and Alan Blinder, former vice chairman of the Federal Reserve, concluded the stimulus created 2.7 million jobs and added $460 billion to gross domestic product. It also stated unemployment currently would be at 11 percent if Congress hadn't enacted the stimulus plan and 16.5 percent if neither the stimulus plan nor the banks' rescue had been enacted. Zandi and Blinder say the $814 billion plan averted what could have been a second Great Depression.

The economic stimulus plan was designed to compensate for the implosion of the housing and credit bubbles. The plan was proposed by President Obama and enacted by Congress during the worst of the U.S.' financial collapse when the economy was shrinking at an annual rate of 6 percent and losing 750,000 jobs per month.

The plan has received criticism from both parties. Some Democrats complained the plan should have been larger and argued it included excessive tax cuts that would not efficiently create jobs. Republicans said the plan involved wasteful spending that would add to government debt. In a recent USA Today/Gallup poll, 59 percent of respondents disapproved of President Obama's handling of the economy.

In general, economists believe the plan helped to prevent a repeat of the 1930s. In fact, economists at Goldman Sachs, New York; IHS Global Insight, Lexington, Mass.; JPMorgan Chase, New York; and Macroeconomic Advisers, St. Louis, say it boosted gross domestic product by 2.1 percent to 2.7 percent. However, many economists believe the stimulus appears less significant than other actions from the Bush and Obama administrations, such as stabilizing crippled banks and the Fed's unconventional monetary policy.

After stimulus spending increased, the economy expanded for four consecutive quarters. However, growth has been shaken recently in the aftermath of the European debt crisis with higher levels in jobless claims and existing home sales reaching their lowest level in 15 years.

As of Aug. 13, nearly 64 percent of the stimulus program’s original $787 billion had been spent.


8/31/2010

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