Last week Christina Romer, President Obama's chief economic adviser, estimated that, thanks to the American Recovery and Reinvestment Act, "employment is now about 485,000 jobs above what it otherwise would have been during the second quarter of 2009." In a report issued today, the leftish Economic Policy Institute (EPI) is even more bullish on the stimulus, estimating that it "created or saved" 720,000 jobs in the second quarter. By EPI's reckoning, only 14 percent of the stimulus money has been spent so far, and future spending will be even more stimulating than past spending. That suggests a total of at least 4.4 million jobs "created or saved" by the whole $787 billion package, about 1 million more jobs than Obama promised. But there's no reason to choose between the numbers; we can pretend they're both right. As Harvard economist Greg Mankiw has noted, such projections are unfalsifiable as long as the total number of jobs (currently about 140 million) does not dip below the number promised.
"If economic growth has resumed," EPI President Lawrence Mishel says in a press release, "it is solely because of the impact of the recovery package." He seems to mean that the stimulus has added two or three points to GDP, which could be the difference between stagnation and growth in the current quarter. Back in February, Obama made an even bolder claim: Without the stimulus package, he warned, the recession could go on forever.
I discussed the connection between the stimulus and the recovery in my column yesterday.