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The Job Impact of the American Recovery and Reinvestment Plan

  • 10-01-2009 7:10pm
    #1
    Économiste Monétaire
    Closed Accounts Posts: 2,208 ✭✭✭


    I couldn't think of a particular thread to place this in. The Obama economic team today released their estimates of multipliers on an approx. $775bn (+) fiscal stimulus plan, with regard to jobs created.

    Find it, here (PDF).

    Just some thoughts and points lifted from the paper:
    They're assuming that this plan will have saved, or created, 3 million jobs by the end of 2010 (they're actually estimating (loosely) between 3.3 and 4.1 million jobs). They've moved away from the sole rhetoric of public works plans and decided to make tax cuts a major factor. Helping individual states with their budget problems is a good idea, considering a stupid need to constantly balance their budgets, which is dangerous in a period of possible deflation and deep recession.

    They're assuming a peak of unemployment, with the plan, will be around Q3-Q4 of 2009. The areas where jobs might be created: Mining 26,000; Construction 678,000; Manufacturing – Total 408,000; Wholesale Trade 158,000; Retail Trade 604,000; Information 50,000; Financial Activities 214,000; Professional and Business Services 345,000; Education and Health; Services 240,000; Leisure and Hospitality 499,000; Other Services 99,000; Utilities 11,000; Transportation and Warehousing 98,000; Government – Total 244,000 and; Total 3,675,000.
    This study has sought to investigate the likely job creation effects of the American Recovery and Reinvestment Plan currently under consideration. As emphasized at many points in the analysis, there is substantial uncertainty around all of our estimates. Nevertheless, we believe they can provide useful guidance as we go forward. Among the key lessons from the analysis are:
    • The recovery plan needs to be large to counter the tremendous job loss that is likely to occur.
    • The plan needs to include a range of components, such as direct government spending, state fiscal relief, and tax cuts to ensure that jobs are created quickly and throughout the economy.
    • The range of components is also important for ensuring that both male and female workers benefit from the program.
    • An aggressive recovery program is important for protecting all Americans from job loss, but particularly for aiding those groups disproportionately hurt by the rise in the overall
    • unemployment rate.
    • A well designed recovery plan will not only create numerous jobs, but also many jobs paying good wages and providing full-time employment.
    It should be taken with a pinch of salt considering it necessarily has a political sheen. I wonder will a $775 billion plan be enough. Also, the multipliers are reasonably conservative, at least not outlandish, but the claims of government spending over tax cuts is slightly dubious to me; in the short-term, anyway.

    Edit: Mankiw on the plan.


Comments

  • #2
    todolist
    Registered Users, Registered Users 2 Posts: 813 ✭✭✭todolist


    This Obama 'plan' will just be pouring petrol on the fire.It will have no effect.The US economy is doomed with this kind of thinking.I also believe the US dollar will head into free fall before the end of this year.Anyone holding US currency or bonds should dump them immediately.


  • #3
    RedPlanet
    Closed Accounts Posts: 1,691 ✭✭✭RedPlanet


    I don't know. It's easy for us to critcize it from our armchairs.
    At least Obama and his incoming administration actually have a plan, or at least are formulating one.

    What is our plan?


  • #4
    todolist
    Registered Users, Registered Users 2 Posts: 813 ✭✭✭todolist


    The money Bush and co have thrown at financial institutions should have been saved to pay the welfare payments of the people who'll inivetabily lose their jobs during this economic correction.As for a government plan.Government have done enough damage to the economy .They must stay out of the way and let the market sort itself out.We can do without goverments and their rediclous plans.The bailout of Anglo tell you how stupid these people are.


  • #5
    [Deleted User]
    Posts: 5,589 ✭✭✭ [Deleted User]


    todolist wrote: »
    This Obama 'plan' will just be pouring petrol on the fire.It will have no effect.The US economy is doomed with this kind of thinking.I also believe the US dollar will head into free fall before the end of this year.Anyone holding US currency or bonds should dump them immediately.

    Care to add some analysis to that?

    Or did you get this 'insight' from sheep guts and star trails.


  • #6
    todolist
    Registered Users, Registered Users 2 Posts: 813 ✭✭✭todolist


    Deleted User wrote: »
    Care to add some analysis to that?

    Or did you get this 'insight' from sheep guts and star trails.
    I didn't get my insight from sheep guts or star trails.I suggest you head over to youtube and type in Peter Schiff of Euro Pacific Capital.This guy was a lone voice in America telling people of the disaster the US was heading into.This guy should be listened to.


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  • #7
    RedPlanet
    Closed Accounts Posts: 1,691 ✭✭✭RedPlanet


    iirc George Soros said something to the effect that markets trend toward extremes, rather than equilibrium..
    I think folks have had enough of laissez fair for generation or two.


  • #8
    [Deleted User]
    Posts: 5,589 ✭✭✭ [Deleted User]


    todolist wrote: »
    I didn't get my insight from sheep guts or star trails.I suggest you head over to youtube and type in Peter Schiff of Euro Pacific Capital.This guy was a lone voice in America telling people of the disaster the US was heading into.This guy should be listened to.

    Research by YouTube. Deep.


  • #9
    todolist
    Registered Users, Registered Users 2 Posts: 813 ✭✭✭todolist


    Deleted User wrote: »
    Research by YouTube. Deep.
    C'mon,that's not necessary.Just listen to the guy.


  • #10
    curiousd
    Closed Accounts Posts: 11 ✭curiousd


    Deleted User wrote: »
    Research by YouTube. Deep.

    In all fairness.......don't you think that's a little simplistic?

    If you saw a clip of Einstein on YouTube would the accuracy of it suddenly be invalidated by the fact that it's on there?

    Some people used to criticise "Internet Research". It can depend on whether you get your facts from sites like sundayworld.com or a more credible source of information.

    If you don't like the idea of seeing Peter Schiff's on YouTube, listen to his weekly podcast "Wall St. Unspun" available on iTunes.
    http://phobos.apple.com/WebObjects/M...t?id=292655537
    or read some articles on his website: http://www.europac.net/

    Also check out Doug Casey
    http://www.caseyresearch.com/casey-s...ns-with-casey/
    http://www.youtube.com/watch?v=zKIYNr2PPgM

    and Gerlade Celente
    http://www.trendsjournal.com/
    http://www.youtube.com/watch?v=J3DfjLCcbzw


    Before the crash in 2006, several economists/trends forcasters were predicting exactly what was going to happen and the reasons why it would happen. They were vilified in the media.

    According to the three guys above who accurately predicted the crash the Obama plan is worst possible thing the government could be doing at the moment.

    Very interesting reading/watching in the links above.


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