page_title: American Recovery and Reinvestment Act of 2009
section_title: Developments under the Act and estimates of the Act's effects
hierarchical_section_title: American Recovery and Reinvestment Act of 2009 / Developments under the Act and estimates of the Act's effects
caption_attribution_description: English: Job loss-gain chart. Data from BLS website here: ID=CES0000000001 http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=CES0000000001 Data is from November 2007 through March 2010. Chart created in OpenOffice.org Calculator --
context_page_description: The American Recovery and Reinvestment Act of 2009, nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Great Recession, the primary objective of this federal statute was to save existing jobs and create new ones as soon as possible. Other objectives were to provide temporary relief programs for those most affected by the recession and invest in infrastructure, education, health, and renewable energy.
  The approximate cost of the economic stimulus package was estimated to be $787 billion at the time of passage, later revised to $831 billion between 2009 and 2019. The ARRA's rationale was based on the Keynesian economic theory that, during recessions, the government should offset the decrease in private spending with an increase in public spending in order to save jobs and stop further economic deterioration.
  Surveys of economists show overwhelming agreement that the stimulus reduced unemployment. In a 2014 IGM Forum survey, only one economist disagreed that the stimulus had lowered unemployment.
context_section_description: The Congressional Budget Office reported in October 2009 the reasons for the changes in the 2008 and 2009 deficits, which were approximately $460 billion and $1.41 trillion, respectively. The CBO estimated that ARRA increased the deficit by $200 billion for 2009, split evenly between tax cuts and additional spending, excluding any feedback effects on the economy.
  On February 12, 2010, the Bureau of Labor Statistics, which regularly issues economic reports, published job-loss data on a month-by-month basis since 2000. Organizing for America, a community organizing project of the Democratic National Committee, prepared a chart presenting the BLS data for the period beginning in December 2007. OFA used the chart to argue, "As a result [of the Recovery Act], job losses are a fraction of what they were a year ago, before the Recovery Act began." Others argue that job losses always grow early in a recession and naturally slow down with or without government stimulus spending, and that the OFA chart was mis-leading.
  
  In the primary justification for the stimulus package, the Obama administration and Democratic proponents presented a graph in January 2009 showing the projected unemployment rate with and without the ARRA. The graph showed that if ARRA was not enacted the unemployment rate would exceed 9%; but if ARRA was enacted it would never exceed 8%. After ARRA became law, the actual unemployment rate exceeded 8% in February 2009, exceeded 9% in May 2009, and exceeded 10% in October 2009. The actual unemployment rate was 9.2% in June 2011 when it was projected to be below 7% with the ARRA. However, supporters of the ARRA claim that this can be accounted for by noting that the actual recession was subsequently revealed to be much worse than any projections at the time when the ARRA was drawn up.
  According to a March 2009 Industry Survey of and by the National Association of Business Economists, 60.3% of their economists who had reviewed the fiscal stimulus enacted in February 2009 projected it would have a modest impact in shortening the recession, with 29.4% anticipating little or no impact as well as 10.3% predicting a strong impact. The aspects of the stimulus expected by the NABE to have the greatest effectiveness were physical infrastructure, unemployment benefits expansion, and personal tax-rate cuts.
  One year after the stimulus, several independent macroeconomic firms, including Moody's and IHS Global Insight, estimated that the stimulus saved or created 1.6 to 1.8 million jobs and forecast a total impact of 2.5 million jobs saved by the time the stimulus is completed. The Congressional Budget Office considered these estimates conservative. The CBO estimated according to its model 2.1 million jobs saved in the last quarter of 2009, boosting the economy by up to 3.5 percent and lowering the unemployment rate by up to 2.1 percent. The CBO projected that the package would have an even greater impact in 2010. The CBO also said, "It is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package." The CBO's report on the first quarter of 2010 showed a continued positive effect, with an employment gain in that quarter of up to 2.8 million and a GDP boost of up to 4.2 percent.  Economists Timothy Conley of the University of Western Ontario and Bill Dupor of the Ohio State University found that while the stimulus' effects on public sector job creation were unambiguously positive, the effects on private sector job creation were ambiguous. Economist Dan Wilson of the Federal Reserve, who used similar methodology, without the same identified errors, estimates that "ARRA spending created or saved about 2 million jobs in its first year and over 3 million by March 2011."
  The CBO also revised its assessment of the long-term impact of the bill. After 2014, the stimulus is estimated to decrease output by zero to 0.2%. The stimulus is not expected to have a negative impact on employment in any period of time.
  In 2011, the Department of Commerce revised some of its previous estimates. Eco
caption: Chart of BLS job-loss data based on OFA's chart.
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