Economically speaking, President Obama is suffering from what you might call “the curse of the avoided catastrophe” – a problem that was greatly, though not entirely, beyond his control. It largely explains his falling public approval ratings as well as the likely bloodbath that his fellow Democrats will suffer in November’s mid-term elections. And things won’t likely get better any time soon.
Here’s what I mean:
A new working paper from the Federal Reserve Bank of San Francisco, to which my fellow blogger, Bruce Bartlett, alerted his readers, provides further evidence that the American Recovery and Reinvestment Act (ARRA) – the huge stimulus measure that President Obama and Congress enacted in February 2009 – is creating jobs.
Specifically, writes the paper’s author, Daniel J. Wilson, ARRA had created or saved up to two million jobs as of March 2010, though that figure fell to 800,000 by May as some of those jobs disappeared during the spring.
Other mainstream experts have suggested that ARRA’s impact has been even greater.
The Congressional Budget Office, for instance, reported in May that ARRA “raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.2 percent, lowered the unemployment rate by between 0.7 percentage points and 1.5 percentage points, increased the number of people employed by between 1.2 million and 2.8 million, and increased the number of full-time-equivalent (FTE) jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise.”
In April, Mark Zandi, the oft-quoted chief economist at Moody’s Analytics, estimated that ARRA saved or created nearly 1.9 million jobs in the first quarter of this year. Two months earlier, Macroeconomic Advisers concluded that, by the end of 2010, ARRA will have created 2.5 million jobs.
Not surprisingly, Obama is eager to highlight the wisdom of his efforts to quickly push stimulus legislation through Congress, enabling him to sign this landmark measure less than a month after he took office.