Recovery Act Third Quarterly Report Quarterly Report - Conclusion


This report continues the Council of Economic Advisers’ assessment of the economic impact of the American Recovery and Reinvestment Act of 2009.  It reflects our attempt to monitor the progress of the Act and the response of the economy as of the first quarter of 2010. 

Our analysis indicates that the Recovery Act has played a key role in the turnaround of the economy that has been occurring over the past four quarters.  Real GDP is growing again, in large part because of the tax cuts and spending increases included in the Act.  Employment, after falling dramatically, has begun to grow again.  Indeed, payroll employment growth has been positive for three of the past five months.  As of the first quarter of 2010, we estimate that total employment is 2.2 to 2.8 million higher than it otherwise would have been.  The tax cuts and income support payments of the Recovery Act account for roughly half of the jobs saved or created to date.

As we have emphasized, measuring what a policy action has contributed to growth and employment is inherently difficult because we do not observe what would have occurred without the policy.  Therefore, it must be understood that our estimates are subject to substantial margins of error.  The results, however, are strong enough and clear enough that we are confident that the basic conclusions are solid.  That a wide range of private and government analysts concur with our estimates adds a reassuring check on our analysis.

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