FEBRUARY 2013

Estimated Impact of the 

American Recovery and Reinvestment 

Act on Employment and Economic 

Output from October 2012 Through 

December 2012

Provided as a convenience, this “screen-friendly” version is identical in 

content to the principal (“printer-friendly”) version of the report. 

Any tables, figures, and boxes appear at the end of this document; 

click the hyperlinked references in the text to view them.

In February 2009, in response to significant weakness in the economy, lawmakers 

enacted the American Recovery and Reinvestment Act (ARRA). The legislation’s 

numerous spending and revenue provisions can be grouped into several categories 

according to their focus:

 Providing funds to states and localities—for example, by raising federal matching 

rates under Medicaid, providing aid for education, and increasing financial support 

for some transportation projects;

 Supporting people in need—such as by extending and expanding unemployment 

benefits and increasing benefits under the Supplemental Nutrition Assistance 

Program (formerly the Food Stamp program);

 Purchasing goods and services—for instance, by funding construction and other 

investment activities that could take several years to complete; and

 Providing temporary tax relief for individuals and businesses—such as by raising 

exemption amounts for the alternative minimum tax, adding a new Making Work Pay 

tax credit, and creating enhanced deductions for depreciation of business 

equipment.
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 2

When ARRA was being considered, the Congressional Budget Office (CBO) and the 

staff of the Joint Committee on Taxation estimated that it would increase budget deficits 

by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total 

impact over the 2009–2019 period will amount to about $830 billion. By CBO’s 

estimate, close to half of that impact occurred in fiscal year 2010, and more than 

90 percent of ARRA’s budgetary impact was realized by the end of December 2012.

Various recipients of ARRA funds (most recipients of grants and loans, contractors, and 

subcontractors) are required to report, after the end of each calendar quarter, the 

number of jobs funded through ARRA. The law also requires CBO to comment on 

those reported numbers.1

During the fourth quarter of calendar year 2012, recipients reported, ARRA funded 

more than 113,000 full-time-equivalent (FTE) jobs.2

 Those reports, however, do not 

provide a comprehensive estimate of the law’s impact on U.S. employment, which 

could be higher or lower than the number of FTE jobs reported, for several reasons (in 

addition to any issues concerning the quality of the reports’ data).3 First, some of the 

jobs included in the reports might have existed even without the stimulus package, with 

employees working on the same activities or other activities. Second, the reports cover 

employers that received ARRA funding directly and those employers’ immediate 

subcontractors (the so-called primary and secondary recipients of ARRA funding) but 

not lower-level subcontractors. Third, the reports do not attempt to measure the 

number of jobs that were created or retained indirectly as a result of recipients’ 

increased income, and the increased income of their employees, which could boost 

demand for other products and services as they spent their paychecks. Fourth, the 

recipients’ reports cover only certain ARRA appropriations, which encompass about 

one-fifth of the total either spent by the government or conveyed through tax reductions 

in ARRA; the reports do not measure the effects of other provisions of the stimulus 

package, such as tax cuts and transfer payments (including unemployment insurance 

payments) to individual people. 

1. Public Law 111-5, sections 1512(c) and 1512(e); 123 Stat. 115, 288. Public Law 112-204, 

enacted on December 4, 2012, changed CBO’s reporting requirements; the agency’s reports on 

ARRA will now be prepared annually, rather than quarterly. This report is the 14th in CBO’s series of 

quarterly reports. For the previous report, see Congressional Budget Office, Estimated Impact of the 

American Recovery and Reinvestment Act on Employment and Economic Output from July 2012 

Through September 2012 (November 2012). 

2. Data compiled from recipients’ reports (on jobs funded and other information) are shown at 

www.recovery.gov. Recipients were asked to calculate FTEs by taking the total number of hours 

worked in a quarter that were funded by ARRA and dividing the total by the number of hours that a 

full-time employee would have worked in that quarter.

3. For a discussion of data quality, see Government Accountability Office, Recovery Act: Opportunities 

to Improve Management and Strengthen Accountability over States’ and Localities’ Uses of Funds,

GAO-10-999 (September 2010), www.gao.gov/new.items/d10999.pdf.
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 3

Estimating the law’s overall effects on employment requires a more comprehensive 

analysis than can be achieved by using the recipients’ reports. Therefore, looking at 

recorded spending to date along with estimates of the other effects of ARRA on 

spending and revenues, CBO has estimated the law’s impact on employment 

and economic output using evidence about the effects of previous similar policies and 

drawing on various mathematical models that represent the workings of the economy.4

On that basis, and as summarized in Table 1, CBO estimates that ARRA’s policies had 

the following effects in the fourth quarter of calendar year 2012 compared with what 

would have occurred otherwise:

 They raised real (inflation-adjusted) gross domestic product (GDP) by between 

0.1 percent and 0.6 percent, 

 They lowered the unemployment rate by between 0.1 percentage points and 

0.4 percentage points,

 They increased the number of people employed by between 0.1 million and 

0.8 million, and

 They increased the number of full-time-equivalent jobs by 0.1 million to 

0.8 million.

The effects of ARRA on output peaked in the first half of 2010 and have since 

diminished, CBO estimates. The effects of ARRA 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 continued to do so through the fourth quarter of 2012. 

Still, CBO estimates that, compared with what would have occurred otherwise, ARRA 

raised real GDP in 2012 by between 0.1 percent and 0.8 percent and increased the 

number of people employed in 2012 by between 0.2 million and 1.1 million. 

Although CBO has examined data on output and employment during the period since 

ARRA’s enactment, those data are not as helpful in determining ARRA’s economic 

effects as might be supposed because isolating the effects would require knowing what 

path the economy would have taken in the absence of the law. Because that path 

cannot be observed, the new data add only limited information about ARRA’s impact.

Measuring ARRA’s Impact Using Recipients’ Reports

ARRA requires primary and secondary recipients of more than $25,000 from 

appropriations made under the law to report a variety of information each calendar 

quarter. That group includes most grant and loan recipients, contractors, and 

4. For a more detailed discussion of CBO’s approach to analyzing the short-term effects of fiscal policy, 

see Felix Reichling and Charles Whalen, Assessing the Short-Term Effects on Output of Changes in 

Federal Fiscal Policies, Congressional Budget Office Working Paper 2012-08 (May 2012).
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 4

subcontractors, but it excludes individual people. The information to be submitted 

includes the amount of funding received and spent; the name, description, and 

completion status of the project or activity funded; the number of jobs funded; and, for 

investments in infrastructure, the purpose and cost of the investment. Recipients who 

filed fourth-quarter reports in January 2013 reported the number of jobs on the basis 

of the number of employee hours paid for with ARRA funds in the quarter.5

According to those reports, 113,691 full-time-equivalent jobs were funded by ARRA 

during the fourth quarter.6 However, the reported number of jobs funded is not a 

comprehensive measure of ARRA’s effect on overall employment or even of those 

provisions of ARRA for which recipients’ reports are required. The actual impact could, 

in principle, be significantly larger or smaller than the number of jobs reported. 

If, for example, recipients’ reports include employment that would have occurred 

without ARRA, the impact on employment suggested by the reports could be too great. 

Some people whose employment was attributed to ARRA might have worked on other 

activities in the absence of the law—for example, a business might have bid on 

other projects if its resources had not been committed to projects funded by ARRA. In 

the case of government employees, state or local taxes might have been raised in the 

absence of ARRA funding (or transfer payments might have been reduced) to pay for 

some of the jobs that were counted as funded by ARRA. 

Conversely, the reported figure could be too low because the reporting requirement is 

limited to primary and secondary recipients of funds and thus excludes lower-level 

recipients, such as subcontractors hired by a main subcontractor. Thus, if expenditures 

under ARRA led to increases in employment among lower-level subcontractors and 

vendors, those effects would be missed by the reports. 

Recipients’ reports also do not include indirect effects that could increase or decrease 

the impact on employment. Among those effects are potential declines in employment 

in other businesses or economic sectors as demand shifts toward the recipients of ARRA 

funding—a phenomenon often called the “crowding out” effect of government 

policies. Conversely, spending under ARRA could lead to higher employment at 

companies that are not directly connected to that spending—for example, because of 

additional purchases made by people who would be unemployed were it not for ARRA 

5. Specifically, recipients were instructed to calculate the number of FTE jobs funded through ARRA by 

counting the total number of hours worked that were funded by ARRA during the fourth quarter, 

divided by the number of hours in a full-time schedule for a quarter. For details and examples, see 

Office of Management and Budget, “Recovery FAQs for Federal Contractors on Reporting,” 

www.whitehouse.gov/omb/recovery_faqs_contractors/#report15.

6. For the number of jobs by agency, see “Top Agencies, as Reported by Recipients (Oct 1–Dec 31, 

2012),”www.recovery.gov/Pages/TextView.aspx?data=jobSummaryAgency&topnumber=

200&qtr=2012Q4.
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 5

funds. CBO estimates that, under current conditions, the indirect effects, on net, would 

tend to reinforce the direct effects for most of the range of their estimated magnitude.

Finally, the recipients’ reports reflect only about one-fifth of the total amount of 

spending increases or tax reductions that are attributable to ARRA’s provisions. The 

reports cover direct government purchases of goods and services, grants and loans to 

private entities, and some grants to states and localities, but they do not cover tax cuts 

or increases in transfer payments to individuals. The tax reductions and spending that 

are not covered by the recipients’ reports probably had substantial effects on purchases 

of goods and services and, therefore, on employment.

Measuring ARRA’s Impact Using Economic Models and Historical Data

CBO used various economic models and historical data to guide its estimate of the 

way in which output and employment are affected by increases in outlays and 

reductions in revenues under ARRA. CBO’s assessment is that different elements of 

ARRA (such as particular types of tax cuts, transfer payments, and government 

purchases) have had different effects on economic output per dollar of higher spending 

or lower tax receipts. Multiplying estimates of those per-dollar effects by the dollar 

amounts of each element of ARRA yields an estimate of the law’s total impact on 

output. To produce estimates of ARRA’s total impact on employment, CBO combined 

that estimate with estimates of how changes in output affect the unemployment rate 

and participation in the labor force.

CBO’s Modeling Approach

CBO used evidence from models and historical relationships to determine estimated 

“multipliers” for each of several categories of spending and tax provisions in ARRA, as 

shown in Table 2. Each multiplier represents the estimated direct and indirect effects on 

the nation’s output of a dollar’s worth of a given policy. Therefore, a provision’s 

multiplier can be applied to the budgetary cost of that provision to estimate its overall 

impact on output. 

Direct effects consist of immediate (or first-round) effects on economic activity. 

Government purchases of goods and services directly add to the nation’s output, dollar 

for dollar. For reductions in taxes, increases in transfer payments, and increases in aid 

to state and local governments, the size of the direct effect depends on the policy’s 

impact on the behavior of recipients. If someone receives a dollar in transfer payments 

and spends 80 cents (saving the other 20 cents), production increases over time to 

meet the additional demand generated by that spending, and the direct impact on 

output is 80 cents. Similarly, if a dollar in aid to a state government leads that 

government to spend 50 cents more on employees’ salaries (but causes no other 

changes in state spending or revenues, with the other 50 cents used to reduce 

borrowing or build up rainy-day funds), the direct impact on output is 50 cents.
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 6

CBO reviewed evidence on the responses of households, businesses, and governments 

to various types of tax cuts and transfer payments to estimate the size of those policies’ 

direct effects on output.7 For example:

 A one-time cash payment is likely to have less impact on a household’s purchases 

than is a longer-lasting change to disposable income because the one-time payment 

has a smaller effect on total lifetime disposable income. 

 Increases in disposable income are likely to boost purchases more for lower-income 

than for higher-income households. That difference arises, at least in part, because 

a larger share of people in lower-income households cannot borrow as much money 

as they would wish in order to spend more than they do currently. 

 Changes to corporate taxes that primarily affect after-tax profits on past investment 

generally have a smaller impact on output than do policies that alter the return from 

new investment. 

Government policies also can have indirect effects that enhance or offset the direct 

effects. Direct effects are enhanced when, for example, a government policy creates 

jobs and those who are hired use their income to boost consumption. Direct effects 

also are enhanced when greater demand for goods and services prompts companies 

to increase investment to bolster their future production.

In the other direction, substantial government spending can cause a shift in resources 

(including employees) away from production in other businesses and sectors to 

government-funded projects. That indirect crowding-out effect could cause growth in 

employment among recipients of ARRA funding to be offset by declines in employment 

elsewhere in the economy. Increases in interest rates are one possible mechanism for 

such crowding out: Higher interest rates discourage spending on investment and on 

durable goods such as cars because they raise the cost of borrowing. However, 

because the Federal Reserve has kept short-term interest rates very low, that mechanism 

does not appear to have been an important factor through the fourth quarter of 2012. 

By another mechanism for crowding out, activities funded by ARRA could reduce 

production elsewhere in the economy if they used scarce materials or workers with 

specific skills, creating bottlenecks that hindered other activities. That effect, too, has 

probably been much smaller since ARRA was enacted than it might have been 

7. On household spending, for example, see Jonathan A. Parker and others, Consumer Spending and 

the Economic Stimulus Payments of 2008, Working Paper 16684 (Cambridge, Mass.: National 

Bureau of Economic Research, January 2011); Matthew D. Shapiro and Joel Slemrod, “Did the 

2008 Tax Rebates Stimulate Spending?” American Economic Review, vol. 9, no. 2 (May 2009), 

pp. 374–379; Sumit Agarwal, Chunlin Liu, and Nicholas S. Souleles, “The Reaction of 

Consumer Spending and Debt to Tax Rebates: Evidence from Consumer Credit Data,” Journal of 

Political Economy, vol. 115, no. 6 (December 2007), pp. 986–1019; and David S. Johnson, 

Jonathan A. Parker, and Nicholas S. Souleles, “Household Expenditure and the Income Tax 

Rebates of 2001,” American Economic Review, vol. 96, no. 5 (December 2006), pp. 1589–1610.
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 7

otherwise because of high unemployment and a large amount of unused resources (as 

well as the diversity of activities funded under ARRA). 

In estimating the magnitude of indirect effects, CBO relied heavily on estimates from 

macroeconometric forecasting models, informed by evidence from other types 

of models, direct estimation using historical data, and ongoing review of relevant 

research.8

The multipliers are applied to outlays when they occur and to changes in taxes or 

transfer payments when they affect disposable income. CBO’s estimates, therefore, 

account for the different rates of spending for various types of appropriations and, 

similarly, for the timing of different tax cuts or transfer payments. In some cases, when 

different elements of a single provision were estimated to have different multipliers, the 

total cost of a provision was divided among more than one category. In those cases, 

the provision is shown in Table 2 in the category to which most of its budgetary cost 

applied. Provisions that affect outlays (including refundable tax credits) are identified by 

the same names used in CBO’s cost estimate for the conference agreement on ARRA.9

Provisions that affect revenues are identified by the names used in the revenue estimate 

prepared by the staff of the Joint Committee on Taxation for the same legislation.10

The estimates of ARRA’s effects on output were translated into estimates of the effects 

on the unemployment rate, total employment, and FTE employment in a series of steps. 

First, the impact on the output gap—the percentage difference between actual and 

potential output—was calculated.11 Next, the effect of the change in the output gap on 

the unemployment rate was estimated using the historical relationship between those 

two measures.12 Then, the effect of changes in the unemployment rate on the labor 

force was taken into account: If unemployment declines and the economic environment 

improves, discouraged workers and people who have chosen to pursue activities such 

as education rather than work will tend to return to the labor force. Together, the 

estimated effect on the unemployment rate and the effect on the labor force were used 

to estimate the impact on the number of people employed. The change in FTE 

employment was then estimated using the historical relationship between changes in 

8. For a detailed discussion of those sources of information, see Felix Reichling and Charles Whalen, 

Assessing the Short-Term Effects on Output of Changes in Federal Fiscal Policies, Congressional 

Budget Office Working Paper 2012-08 (May 2012).

9. See Congressional Budget Office, cost estimate for the conference agreement for H.R. 1, the 

American Recovery and Reinvestment Act of 2009 (February 13, 2009).

10. See Joint Committee on Taxation, Estimated Budget Effects of the Revenue Provisions Contained in the 

Conference Agreement for H.R. 1, JCX-19-09 (February 12, 2009), www.jct.gov/x-19-09.pdf. 

11. Potential output is the level of production that corresponds to a high rate of use of labor and capital. 

12. Changes in the output gap affect unemployment gradually over several quarters. Initially, part of a 

rise in output shows up as higher productivity and hours per worker rather than as reduced 

unemployment.
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 8

hours per employed worker and changes in the gap between the unemployment rate 

and CBO’s estimate of the natural rate of unemployment.13 Because higher spending 

and lower taxes can affect output and unemployment for some time after they occur, 

the impact of ARRA on employment in the fourth quarter of 2012 depended partly on 

the law’s effect on spending and revenues in previous years.

A key advantage of the model-based approach used in this analysis is the ability to 

provide estimates of the total effects throughout the economy of the government 

spending, transfer payments, and tax cuts resulting from ARRA. By focusing on the net 

change in employment, that approach captures both the jobs created and the jobs 

retained as a result of ARRA.

A key disadvantage of the model-based approach is the considerable uncertainty 

about many of the economic relationships that are important in the modeling. Because 

economists differ on which analytical approaches provide the most convincing 

evidence about such relationships, they can reach different conclusions about those 

relationships. In addition, each study involves uncertainty about the extent to which the 

results reflect the true effects of a given policy or the effects of other factors. For those 

reasons, CBO provides ranges of estimates of ARRA’s economic effects that are 

intended to encompass most economists’ views and thereby reflect the uncertainty 

involved in such estimates.

Changes from CBO’s Previous Estimates of the Impact of ARRA 

CBO’s estimates of the economic effects of ARRA are very similar to those the agency 

published in November 2012.14 Some of the current estimates of the impact of ARRA 

on output and employment for the period from 2009 through 2011 are slightly 

different from those presented in November 2012, however, because of revised 

estimates of the effect that ARRA had on tax revenues beginning in 2009. Changes to 

CBO’s estimates of the economic effects of ARRA in 2012 and 2013 reflect small 

revisions to its previous estimates of the timing and magnitude of changes to federal 

spending as a result of ARRA. Overall, CBO’s estimate of the budgetary impact of 

ARRA over the 2009–2013 period is about the same as it was last November. 

ARRA’s Long-Run Effects 

In contrast to its positive near-term macroeconomic effects, ARRA will reduce output 

slightly in the long run, CBO estimates—by between zero and 0.2 percent after 2016. 

But CBO expects that the legislation will have no long-term effects on employment 

13. The natural rate of unemployment is the rate that arises from all sources except cyclical fluctuations 

in economywide demand for goods and services.

14. See Congressional Budget Office, Estimated Impact of the American Recovery and Reinvestment Act 

on Employment and Economic Output from July 2012 Through September 2012 (November 2012). 
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 9

because the U.S. economy will have a high rate of use of its labor resources in the long 

run.15

ARRA’s long-run impact on the economy will stem primarily from the resulting increase 

in government debt.16 To the extent that people hold their wealth in government 

securities rather than in a form that can be used to finance private investment, the 

increased debt tends to reduce the stock of productive private capital. In the long run, 

each dollar of additional debt crowds out about a third of a dollar’s worth of private 

domestic capital, CBO estimates. (The remainder of the rise in debt is offset by 

increases in private saving and inflows of foreign capital.) Because of uncertainty about 

the degree of crowding out, however, CBO’s range of estimates of ARRA’s long-run 

effects reflects the possibility that the extent of crowding out could be more or less than 

one-third of the added debt.

Over the long term, the output of the economy depends on the stock of productive 

capital, the supply of labor, and productivity. The less productive capital there is as 

a result of lower private investment, the smaller will be the nation’s output over the 

long run.

The effect of the crowding out of some private investment under ARRA will be offset 

somewhat by other factors. Some of ARRA’s provisions, including its funding for roads 

and highways, may add to the economy’s potential output in much the same way that 

private capital investment does. Others, including its funding of education, may raise 

long-term productivity by enhancing people’s skills. Still other provisions create 

incentives for increased private investment. According to CBO’s estimates, the 

provisions that potentially add to long-term output account for between one-fifth and 

one-quarter of ARRA’s budgetary cost. 

ARRA’s long-run effect on output also depends on whether it permanently changed 

people’s saving or their ability or willingness to work. For example, to the extent that 

ARRA reduced long-term unemployment during the 2009–2012 period, it might 

improve participation in the labor force, employment, and productivity in later years. 

However, CBO’s estimates of the long-term effects of ARRA do not incorporate any 

effects of that sort.

15. The reduction in GDP is therefore estimated to be reflected in lower wages rather than less 

employment, as workers will be slightly less productive because the capital stock will be slightly 

smaller. See Congressional Budget Office, letter to the Honorable Judd Gregg concerning the 

estimated macroeconomic impacts of H.R. 1 as passed by the House and by the Senate (February 

11, 2009). CBO has not updated the long-term estimates in that letter.

16. For a discussion of the long-run effects of other debt-financed policies for boosting output and 

employment, see statement of Douglas W. Elmendorf, Director, Congressional Budget Office, before 

the Senate Committee on the Budget, Policies for Increasing Economic Growth and Employment in 

2012 and 2013 (November 15, 2011).
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 10

Section 1512(e) of the American Recovery and Reinvestment Act of 2009 (ARRA) requires 

the Congressional Budget Office (CBO) to comment on reports filed by recipients of 

ARRA funding that detail the number of jobs funded through their activities. This CBO 

report fulfills that requirement. Felix Reichling of CBO’s Macroeconomic Analysis Division 

wrote the report under the supervision of Wendy Edelberg and Benjamin Page. Jared 

Brewster, Mark Lasky, and Joshua Shakin contributed to the analysis. This report, along 

with previous reports on the topic, is available at the agency’s Web site (www.cbo.gov).

Douglas W. Elmendorf 

Director
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 11

Table 1. Return to Reference

Estimated Macroeconomic Impact of the American Recovery and 

Reinvestment Act, 2009 to 2013

Source: Congressional Budget Office.

Note: * = Between -0.05 and 0.05.

a. A year of full-time-equivalent employment years is 40 hours of employment per week for one year.

2009

Q1 * 0.1 * * * * * 0.1

Q2 0.4 1.3 -0.1 -0.3 0.1 0.5 0.2 0.7

Q3 0.6 2.4 -0.2 -0.6 0.3 1.1 0.4 1.7

Q4 0.7 3.3 -0.2 -1.0 0.5 1.9 0.7 2.7

2010

Q1 0.9 4.3 -0.3 -1.5 0.6 2.7 0.9 3.9

Q2 0.8 4.6 -0.4 -1.8 0.7 3.4 1.0 4.8

Q3 0.7 4.1 -0.4 -2.0 0.7 3.6 1.0 5.1

Q4 0.6 3.5 -0.3 -1.9 0.6 3.5 0.9 4.9

2011

Q1 0.6 3.2 -0.3 -1.8 0.6 3.3 0.8 4.6

Q2 0.4 2.5 -0.3 -1.6 0.5 2.9 0.7 4.0

Q3 0.3 2.0 -0.2 -1.3 0.4 2.4 0.5 3.3

Q4 0.2 1.5 -0.2 -1.1 0.3 2.0 0.4 2.6

2012

Q1 0.1 1.0 -0.1 -0.8 0.2 1.5 0.3 1.9

Q2 0.1 0.8 -0.1 -0.6 0.2 1.2 0.2 1.4

Q3 0.1 0.7 -0.1 -0.5 0.2 0.9 0.2 1.0

Q4 0.1 0.6 -0.1 -0.4 0.1 0.8 0.1 0.8

2013

Q1 0.1 0.5 -0.1 -0.3 0.1 0.7 0.1 0.7

Q2 0.1 0.5 -0.1 -0.3 0.1 0.6 0.1 0.5

Q3 0.1 0.4 * -0.3 0.1 0.5 0.1 0.4

Q4 * 0.3 * -0.2 0.1 0.4 * 0.3

2009 0.4 1.8 -0.1 -0.5 0.2 0.9 0.3 1.3

2010 0.7 4.1 -0.4 -1.8 0.7 3.3 0.9 4.7

2011 0.4 2.3 -0.2 -1.4 0.5 2.6 0.6 3.6

2012 0.1 0.8 -0.1 -0.6 0.2 1.1 0.2 1.3

2013 0.1 0.4 * -0.3 0.1 0.5 0.1 0.5

Calendar Year Quarters

Calendar Year Average

Low High

Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate

Low High Low High Low High

Product (Percent) (Percentage points) (Millions of people) Employment Years (Millions)a

Change Attributable to ARRA

Real Gross Domestic Unemployment Rate Employment Years Full-Time-Equivalent
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 12

Table 2. Return to Reference 1, 2

Estimated Macroeconomic Impact of the American Recovery and 

Reinvestment Act, 2009 to 2013

Continued

Type of Activity Major Provisions of ARRA

Purchases of Goods and Services 0.5 2.5 Division A, Title II: Other; Title IV: Energy Efficiency and

by the Federal Government Renewable Energy; Title IV: Innovative Technology Loan

Guarantee Program; Title IV: Other Energy Programs; Title V: 

Federal Buildings Fund; Title VIII: National Institutes of Health;

Title VIII: Other Department of Health and Human Services

Transfer Payments to State and 0.4 2.2 Division A, Title VII: Clean Water and Drinking Water State 

Local Governments for Revolving Funds; Title XI: Other Housing Assistance; Title XII: 

Infrastructure Highway Construction; Title XII: Other Transportation 

Transfer Payments to State and 0.4 1.8 Division A, Title VIII: Education for the Disadvantaged; Title 

Local Governments for Other VIII: Special Education; Title IX: State Fiscal Stabilization Fund; 

Purposes Division B, Title V: State Fiscal Relief Fund

Transfer Payments to Individuals 0.4 2.1 Division A, Title I: Supplemental Nutrition Assistance Program; 

Title VIII: Student Financial Assistance; Division B, Title I: 

Refundable Tax Credits; Title II: Unemployment 

Compensation; Title III: Health Insurance Assistanceb

One-Time Payments to Retirees 0.2 1.0 Division B, Title II: Economic Recovery Payments

Two-Year Tax Cuts for Lower- 0.3 1.5 Division B, Title I: Making Work Pay Credit;

and Middle-Income People American Opportunity Tax Credit

One-Year Tax Cut for Higher- 0.1 0.6 Increase in Individual AMT Exemption Amount

Income People

Extension of First-Time 0.2 0.8 Extension of First-Time Homebuyer Credit

Homebuyer Credit

Estimated Output Multipliersa

Low Estimate High Estimate
CBO

ESTIMATED IMPACT OF ARRA FROM OCTOBER 2012 THROUGH DECEMBER 2012 FEBRUARY 2013 13

Table 2. Continued

Estimated Macroeconomic Impact of the American Recovery and 

Reinvestment Act, 2009 to 2013

Source: Congressional Budget Office.

Notes: Provisions affecting outlays (including refundable tax provisions) are identified by the same names used by CBO in its cost estimate for 

the conference agreement for H.R. 1, the American Recovery and Reinvestment Act of 2009 (February 13, 2009). Provisions affecting 

revenues—all of which are included in title I of the American Recovery and Reinvestment Act of 2009 (ARRA)—are identified by the 

names used in the Joint Committee on Taxation’s (JCT’s) estimate (see www.house.gov/jct/x-19-09.pdf). 

The economic impact of three tax provisions with budgetary costs over $5 billion was analyzed using a different methodology, and 

their effects cannot easily be summarized by a multiplier. Those provisions were titled “Extend by Three Years the Placed-in-Service 

Date for Each Section 45 Qualified Facility” and “One-Year Extension of Special Allowance for Certain Property Acquired During 2009” 

in JCT’s estimate and “Health Information Technology” in CBO’s estimate. Some other provisions, with total budgetary costs of less 

than $7 billion, were included in the analysis but are not shown in the table.

AMT = alternative minimum tax.

a. The output multiplier is the cumulative impact of spending under the provisions on gross domestic product over several quarters. The 

ranges shown in the table assume that the Federal Reserve is holding short-term interest rates about as low as possible and would not 

tighten monetary policy in response to a fiscal stimulus.

b. This provision is a reduction in taxes, but it is treated as having the same economic impact as transfer payments to individuals.

Type of Activity Major Provisions of ARRA

Corporate Tax Provisions 0 0.4 Deferral and Ratable Inclusion of Income Arising from Business 

Primarily Affecting Cash Flow Indebtedness Discharged by the Reacquisition of a Debt 

Instrument; Clarification of Regulations Related to Limitations 

on Certain Built-In Losses Following an Ownership Change; 

Recovery Zone Bonds; Qualified School Construction Bonds 

Estimated Output Multipliersa

Low Estimate High Estimate