Last week, I wrote a blog post marking the third anniversary of the American Recovery and Reinvestment Act (ARRA) and highlighting ARRA’s pivotal role in turning the economy around. Numbers crunched for the Congressional Budget Office’s (CBO) latest report on the legislation emphasize the same takeaway. Since ARRA was enacted in Feb. 2009, CBO has published periodic reports on the macroeconomic impact of ARRA; their latest looks at employment and economic output from Oct. 2011 through Dec. 2011. CBO finds that in the fourth quarter of calendar year 2011, ARRA’s successes included:
- Raising real GDP by between 0.2 percent (low estimate) and 1.5 percent (high estimate);
- Lowering the unemployment rate by between 0.2 and 1.1 percentage points;
- Increasing the number of people employed by as low as 300,000 and as high as 2 million; and
- Increasing the number of full-time equivalent jobs (which assume a full-time schedule worked by employees) by between 400,000 and 2.6 million.
Furthermore, CBO projects that ARRA will raise real GDP by between 0.1 and 0.8 percent and will increase the number of people employed by between 200,000 and 1.1 million in 2012, compared to the counterfactual without passage.
The two charts below show ARRA’s quarterly impact (both low and high estimates, as well as midpoints) on real GDP growth and the unemployment rate. The data include projections through 2013. Note that the majority of the impact occurred between Q3 2009 and Q4 2011. The subsequent waning is due to the fact that around 90 percent of ARRA’s budgetary impact was realized by the end of December 2011.