In January 2009, economists with the incoming Obama administration, Jared Bernstein and Christina Romer, devised an economic forecast that gamed out how the US economy would perform through 2013 with and without fiscal stimulus. The above chart is taken from that report. I have added the text in red.
(It is a chart most famous for its prediction that the jobless rate would never hit 8% if Congress passed the stimulus. Eventually, with the stimulus, the jobless rate topped out at 10%.)
On the surface at least, as I see it, the forecast was pretty wide the mark.
Obama White House defenders might point out that (a) the recession was worse than what the real-time data suggested, (b) outside shocks like the Eurzozone crisis slowed growth, (c) fiscal austerity here at home was also a drag, (d) economies tend to recover particularly slowly after financial crises.
I would counter thusly: (a) Team Obama almost certainly didn’t expect the labor force collapse so the forecast was even more bullish than it appears, (b) the aftermath of the financial crisis should have been no surprise, (c) the economy even had the added boost from historic monetary stimulus.
So what is the bottom line on the impact of the Obama stimulus on employment? Well, I think it is pretty tough to tease out the specific impact given everything else that was happening simultaneously from policy to macro forces that predated the downturn. Countless papers will be written and studies performed. But I sure would have preferred the fiscal stimulus been built around a big, fat investment tax credit with the Fed far more aggressive early on. I am even more sure that Bernstein and Romer wish they had never made that chart.