Today is the one-year anniversary of the American Recovery and Reinvestment Act—more commonly known as the stimulus. The $1 trillion spending bill (when interest is calculated in) was targeted to be spent over two years so the full impact hasn’t been felt yet. Only about 35% of the money has been distributed. If the stimulus were a football game then any critiques of the first half might be pushed aside by the “wait and see” retort. Nevertheless, we can do a halftime assessment.
Let’s start with some basic stats:
Unemployment: the White House projected unemployment would top out around 8 percent last summer and then decline. In reality, unemployment climbed to a max of 10.1 percent in October and since then has trickled down to 9.7 percent. Unemployment in January 2009 was 7.7 percent.
Jobs: The stimulus was pitched in many respects as a jobs bill—the president promised to create or save 3.5 million jobs. Well, a year later there are 3.9 million less people employed in America.
GDP: The first quarter of 2009 saw GDP dip 6.4 percent. Stimulus money started trickling out by the second quarter and GDP only dropped another 0.7 percent. The third quarter saw a positive gain of 2.2 percent. And the year ended with a jump in GDP by 5.7 percent (tho that number could be adjusted down). Overall, the economy grew by 0.8 percent in 2009. The Obama administration says this is because of the stimulus and other government programs—and they might be right. But if that is case it bodes poorly for the economy that was only supported by unsustainable government spending.
The past year has seen complaints about the true accountability of the spending. Reports have come in from different departments in varying formats. Job creation was reported in congressional districts that didn’t exist. Money has gone to programs like the Glacier-Fjord-Ocean Interaction Study at the Gronlands Nature Institute in North Greenland… yes, as in the country of Greenland. Oh, and $3.5 billion has also been allocated to programs that the president now has put on the chopping block to try and reign in discretionary spending, like $200 million for the Army Corps of Engineers drinking-water projects that Obama is giving the ax to in the 2011 budget.
Stimulus programs inherently are unsustainable and simply don’t work to build long-term economic growth. And as we’ve found in the past year, while some local areas have benefited from the cash dump, the stimulus hasn’t really been all that a great in the short run, given the job loss.
Ultimately, defining success is a tricky thing, because the way the White House is approaching the matter is to define success by labeling whatever has happened positively in the economy as a result of the stimulus. It seems to me, though, that a more tangible definition of success is an economy that is in recovery and on a sustainable path to growth in the future. If this is the yard stick the we are far short at the end of the first half.