In December 2007, the United States entered what has turned out to be its deepest recession since the end of World War II. Between the fourth quarter of 2007 and the third quarter of 2009, gross domestic product (GDP) fell by about 2.8 percent, or $377 billion. The unemployment rate rose from 4.9 percent in 2007 to 10.2 percent in October 2009, a level not seen since April 1983. The CBO projects that the unemployment rate will remain above 9 percent through 2011. Confronted with unprecedented weakness in the financial sector and the overall economy, the federal government and the Federal Reserve together acted to moderate the downturn and restore economic growth. The Federal Reserve used monetary policy to respond to the recession by pursuing one of the most significant interest rate reductions in U.S. history. In concert with the Department of the Treasury, it went on to bolster the supply of credit in the economy through measures that provide Federal Reserve backing for a wide variety of loan types, from mortgages to automobile loans to small business loans. The federal government also used fiscal policy to confront the effects of the recession. Existing fiscal stabilizers, such as unemployment insurance and progressive aspects of the tax code, kicked in automatically in order to ease the pressure on household income as economic conditions deteriorated. In addition, Congress enacted a temporary tax cut in the first half of 2008 to buoy incomes and spending and created the Troubled Asset Relief Program in the second half of 2008 to give Treasury authority to act to restore financial market functioning. The federal government’s largest response to the recession to date came in early 2009 with the passage of the Recovery Act, the broad purpose of which is to stimulate the economy’s overall demand for goods and services, or aggregate demand. The Recovery Act is specifically intended to preserve and create jobs and promote economic recovery; to assist those most impacted by the recession; to provide investments needed to increase economic efficiency by spurring technological advances in health and science; to invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits; and to stabilize the budgets of state and local governments. The CBO estimates that the net cost of the Recovery Act will total approximately $787 billion from 2009 to 2019. The Recovery Act uses a combination of tax relief and government spending to accomplish its goals. The Recovery Act’s tax cuts include reductions to individuals’ taxes, payments to individuals in lieu of reductions to their taxes, adjustments to the Alternative Minimum Tax, and business tax incentives. Tax cuts encompass approximately one-third of the Recovery Act’s dollars. Recovery Act spending includes temporary increases in entitlement programs to aid people directly affected by the recession and provide some fiscal relief to states; this also accounts for about one third of the Recovery Act. For example, the Recovery Act temporarily increased and extended unemployment benefits, temporarily increased the rate at which the federal government matched states Medicaid expenditures, and provided additional funds for the Supplemental Nutrition Assistance and the Temporary Aid to Needy Families programs, among other things. Other spending, also accounting for about a third of the act falls into the category of grants, loans, and contracts. This includes government purchases of goods and services, grants to states through programs such as the State Fiscal Stabilization Fund for education and other government services, and government investment in infrastructure, health information technology, renewable energy research, and other areas. In interpreting recipient reporting data, it is important to recognize that the recipient reporting requirement only covers a defined subset of the Recovery Act’s funding. The reporting requirements apply only to nonfederal recipients of funding, including all entities receiving Recovery Act funds directly from the federal government such as state and local governments, private companies, educational institutions, nonprofits, and other private organizations. OMB guidance, consistent with the statutory language in the Recovery Act, states that these reporting requirements apply to recipients who receive funding through the Recovery Act’s discretionary appropriations, not recipients receiving funds through entitlement programs, such as Medicaid, or tax programs. Recipient reporting also does not apply to individuals. In addition, the required reports cover only direct jobs created or retained as a result of Recovery Act funding; they do not include the employment impact on materials suppliers (indirect jobs) or on the local community (induced jobs). Figure 1 shows the division of total Recovery Act funds and their potential employment effects. Tracing the effects of the Recovery Act through the economy is a complicated task. Prospectively, before the act’s passage or before funds are spent, the effects can only be projected using economic models that represent the behavior of governments, firms, and households. While funds are being spent, some effects can be observed but often relevant data on key relationships and indicators in the economy are available only with a lag, thereby complicating real-time assessments. When a full range of data on outcomes becomes available, economic analysts undertake retrospective analyses, where the findings are often used to guide future policy choices and to anticipate effects of similar future policies. Stimulus spending under the broad scope of the Recovery Act will reverberate at the national, regional, state, and local levels. Models of the national economy provide the most comprehensive view of policy effects, but they do not provide insight, except indirectly, about events at smaller geographical scales. The diversity and complexity of the components of the national economy are not fully captured by any set of existing economic models. Some perspective can be gained by contemporaneous close observation of the actions of governments, firms, and households, but a complete and accurate picture of the Recovery Act’s impact will emerge only slowly. Section 1512 of the Recovery Act requires recipients of recovery funds to report on those funds each calendar quarter. These recipient reports are to be filed for any quarter in which a recipient receives Recovery Act funds directly from the federal government. The recipient reporting requirement covers all funds made available by appropriations in division A of the Recovery Act. The reports are to be submitted no later than 10 days after the end of each calendar quarter in which the recipient received Recovery Act funds. Each report is to include the total amount of Recovery Act funds received, the amount of funds expended or obligated to projects or activities, and a detailed list of those projects or activities. For each project or activity, the detailed list must include its name and a description, an evaluation of its completion status, and an estimate of the number of jobs created or the number of jobs retained by that project or activity. Certain additional information is also required for infrastructure investments made by state and local governments. Also, the recipient reports must include detailed information on any subcontracts or subgrants as required by the Federal Funding Accountability and Transparency Act of 2006. Section 1512(e) of the Recovery Act requires GAO and CBO to comment on the estimates of jobs created or retained reported by recipients. In its guidance to recipients for estimating employment effects, OMB instructed recipients to report only the direct employment effects as “jobs created or retained” as a single number. Recipients are not expected to report on the employment impact on materials suppliers (indirect jobs) or on the local community (induced jobs). According to the guidance, “A job created is a new position created and filled or an existing unfilled position that is filled as a result of the Recovery Act; a job retained is an existing position that would not have been continued to be filled were it not for Recovery Act funding. Only compensated employment . . . should be reported. The estimate of the number of jobs . . . should be expressed as ‘full-time equivalents (FTE),’ which is calculated as total hours worked in jobs created or retained divided by the number of hours in a full-time schedule, as defined by the recipient.” Consequently, the recipients are expected to report the amount of labor hired or not fired as result of having received Recovery Act funds. It should be noted that one FTE does not necessarily equate to the job of one person. Firms may choose to increase the hours of existing employees, for example, which can certainly be said to increase employment but not necessarily be an additional job in the sense of adding a person to the payroll. To implement the recipient reporting data requirements, OMB has worked with the Recovery Accountability and Transparency Board (Recovery Board) to deploy a nationwide data collection system at www.federalreporting.gov (Federalreporting.gov), while the data reported by recipients are available to the public for viewing and downloading on www.recovery.gov (Recovery.gov). Recovery.gov, a site designed to provide transparency of information related to spending on Recovery Act programs, is the official source of information related to the Recovery Act. The Recovery Board’s goals for the Recovery Act Web site include promoting accountability by providing a platform to analyze Recovery Act data and serving as a means of tracking fraud, waste, and abuse allegations by providing the public with accurate, user-friendly information. In addition, the site promotes official data in public debate, assists in providing fair and open access to Recovery Act opportunities, and promotes an understanding of the local impact of Recovery Act funding. In an effort to address the level of risk in recipient reporting, OMB’s June 22, 2009, guidance on recipient reporting includes a requirement for data quality reviews. OMB’s data quality guidance is intended to address two key data problems—material omissions and significant reporting errors. Material omissions and significant reporting errors are risks that the information is incomplete and inaccurate. As shown in figure 2, OMB gave specific time frames for reporting that allow prime recipients and delegated subrecipients to prepare and enter their information on days 1 through 10 following the end of the quarter. During days 11 through 21, prime recipients will be able to review the data to ensure that complete and accurate reporting information is provided prior to a federal agency review and comment period beginning on the 22nd day. During days 22 to 29 following the end of the quarter, federal agencies will perform data quality reviews and will notify the recipients and delegated subrecipients of any data anomalies or questions.