A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an ”urgent need to accelerate job growth.”
An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.
I haven’t seen the study—in fact, it doesn’t appear that there is a study available for independent analysis—so it would be unacademic to take them at their word. But the reported findings of this analysis are in line with what we’ve been seeing at Reason Foundation over the past year as we track stimulus related spending.
Interestingly, Transportation Secretary LaHood has defended the stimulus as “the only thing propping up the transportation construction industry.” If that is true, and I’m inclined to agree with him, then it doesn’t say much for a real recovery as a whole. In fact, this is what we’re seeing mirrored in other sectors of the economy as well. Housing and banking are also dependent on the government for their current growth. As a result, the recent GDP gains we’ve seen are built on a foundation no more stable than Uncle Sam’s beard. How long can the government support the entire economy?