2013 is coming to an end and now is time to once again take a look at the economic Stimulus package signed by President Obama in March of 2009.
Here is why:
In days before being inaugurated, Obama’s team projected that if we have a Stimulus package of $775 billion, the U.S. Economy will produce a net of between 3.3 million and 4.1 million non-farm jobs by the fourth quarter (the last three months) of 2010. No, it was not a projection of “jobs saved or created! Instead, the paper wrote that if the Stimulus reaches mid-point of the above projected job growth, the US will have 137.55 million people on payroll at the fourth quarter of 2010.
Well, we are at the fourth quarter of 2013 and we are short of this target by close to one million.
Even if we were to reach only to low-end job growth as projected in the pre-Stimulus days, the US economy should have had 137.1 million people on payroll at the end of 2010 but three years later we are not there yet either.
To be fair to Obama’s team, they were looking at a job market that at the time was thought to have lost only 2.6 million jobs since the start of the recession, when it turns out it was actually a job loss of 4.4 million at the of the Stimulus projection. In other words, the job market was indeed worse than expected but as we have seen from the 1945 and 1957 downturns, the deeper and steeper you go down the faster and steeper you come up; a thing that has not happened following the last downturn.
Secondly, if we were to hold Obama’s people to the expectation of their Stimulus projection, I would ask them why does the U.S. not have now at least 143 million people on payrolls. After all, mid-range expectation of the Stimulus foresaw a net growth of 1.85M jobs in each of the two years 2009-2010. Producing these levels of jobs per each of the following three years too should have placed the U.S. now at more than 143M jobs, but I am not asking about 143M jobs. I am only asking why are we not at the low bar of the Stimulus estimate? It’s the end of 2013 now; not the end of 2010, 2011 or 2012.
The Obama team placed the Unemployment Rate at 5% for the start of 2014, whether we do or don’t have a Stimulus. That was done with the thought of a job market better than what it really was, but here again let’s put things into perspective: The UR now is at 7% and if not for millions of young people who gave up looking for work since Obama came in, the UR would be now about 9.5%. How do you justify an UR almost double the level you have projected it would be? Worse, the Stimulus projection was not counting on the Fed to pump literally trillions of dollars into the economy, yet our UR is really 9.5%.
These numbers prove once again that the Stimulus package – while some of it helped for a while, such as the tax cuts for buying new houses but all in all – failed to produce the minimal expected results.