Economic Report, Christina Romer

Christina Romer, Advisor to the President.

The Council of Economic Advisors submitted a crucial report today on the state of the economy.

“White House economists touted the success of the government’s $787 billion stimulus program on Wednesday, saying it had saved or created 2.5 million to 3.6 million jobs since it was signed a year ago.

The new report by the Council of Economic Advisers showed that the pace of fiscal stimulus had accelerated, with spending growing to $116 billion in the second quarter from $108 billion in the first quarter and $80 billion in the final three months of 2009.

The White House also estimated that gross domestic product, a measure of overall economic output, was 2.7 percent to 3.2 percent higher than it would have been without the $787 billion in stimulus. The new estimate is in line with projections by the nonpartisan Congressional Budget Office..

The report used historical data and statistical modeling to arrive at the estimate of jobs saved or created, but Ms. Romer, a professor on leave from the University of California, Berkeley, acknowledged that there was some uncertainty over the job estimates, which rely on reporting from recipients of federal aid.

“There’s obviously a lot of uncertainty about any job estimates, and I suspect the true effects of the act will not be fully analyzed or fully appreciated for many years,” she said, adding that outside experts and the Congressional Budget Office agreed that the stimulus had had a “significant, beneficial impact on employment and output over the past year.”

 “G.D.P. shrank, not expanded, in that first quarter that we inherited, 6.4 percent,” Mr. Biden said. “And we inherited it before we turned the lights on — not figuratively, literally, before we entered the West Wing. We were handed a deficit bill that year for over $1 trillion. Those are the facts.”

Real G.D.P. has been growing since the third quarter of 2009, and private-sector payrolls have increased by nearly 600,000 since their low point in December 2009. But that has been barely enough to keep pace with the normal rate of growth of the work force.”

In her testimony before the Joint Economic Committee, Chairwoman Romer argued that job growth was stagnating.  She argued that we need specific job activities including  extension of unemployment benefits, and job creation through investing in state and local governments, such as the hiring of teachers and police.   The entire report is available on line. ßå