President Obama's much-maligned economic stimulus package added as many as 3.3 million jobs to the economy during the second quarter of this year, and may have prevented the nation from lapsing back into recession, according to a report released Tuesday by the non-partisan Congressional Budget Office. In its latest quarterly assessment of the act, the CBO said the stimulus lowered the unemployment rate by between 0.7 and 1.8 percentage points during the quarter ending in June and increased the number of people employed by between 1.4 million and 3.3 million. The higher figure would come close to making good on Obama's pledge that the act would save or create as many as 3.5 million jobs by the end of this year.
The CBO said the act also increased the nation's gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy. The Commerce Department estimates that GDP grew 2.4 percent in the second quarter, a figure many economists expect to be revised lower in a report due out Friday.
The CBO cautioned that the the act's effects are expected to "gradually diminish during the second half of 2010 and beyond," leaving the private sector to pick up the slack in an economy that is already showing signs of deteriorating rapidly. On the bright side, the CBO revised the cost of the package downward: Originally estimated to cost $787 billion over 10 years, the stimulus was later estimated to cost $862 billion. But in the report released Tuesday, the CBO said it now expects the measure to cost only about $814 billion through 2019, with 70 percent of those costs incurred by the end of this year.
Polls show that the public is deeply skeptical about the stimulus and tends to believe that it increased the national deficit without improving the economy. Republicans hoping to seize control of Congress in the November midterm elections have been blasting the act as a failure. But the CBO, which is respected by both Republicans and Democrats, has long held a different view and Democrats hailed Tuesday's report as further vindication of the president's signal economic achievement.
"This new analysis from the nonpartisan Congressional Budget Office is further confirmation of what we've been hearing from leading economists, the nation's governors and families across the country: the Recovery Act is working to rescue the economy from eight years of failed economic policy and rebuild it even stronger than before," Vice President Biden said in a statement.
