An Industry by Industry Look at the Stimulus Failure

by Morgen Richmond

You are probably familiar by now with this infamous graph published by the White House in January 2009 highlighting their expectations for the impact of the Recovery Act on the rate of unemployment. Far from leveling off at 8% and then declining, the actual unemployment rate ran up to 10% by the end of 2009 and has declined only slightly since to 9.5%, largely due to a decline in labor force participation. This in spite of the rapid passage of the massive $787 billion stimulus bill in February 2009. (Geoff at the Innocent Bystanders blog deserves everlasting credit for being the first to point out this disconnect.)

With the White House and other Democrats resolutely sticking to their claim that the stimulus bill “saved or created” 3-4 million jobs, I thought it might be worthwhile to point out that the very same January 2009 White House report also included an industry by industry forecast of where these 3-4 million jobs would come from. Here it is:

Thanks to the inclination of economists to model verifiable data (even when they are pulling numbers out of the sky), these industry categories happen to align perfectly with employment data tracked by the Bureau of Labor Statistics. Thus we can easily compare the actual changes in employment to the figures forecast by the White House. In the table below, I’ve calculated the net change in employment by industry from February 2009, when the stimulus bill was passed, to July 2010, using the latest data available from the BLS. (Click row headings for data source.)

Jobs Created
Forecast

(Q4-2010)

 Jobs Created
Actual

(2/2009 to 7/2010)
TOTAL 3,675,000 -2,629,700
Mining 26,000 -14,000
Construction 678,000 -862,000
Manufacturing 408,000 -660,000
Wholesale Trade 158,000 -173,900
Retail Trade 604,000 -288,900
Information 50,000 -161,000
Financial Activities 214,000 -321,000
Professional and Business Services 345,000 -246,000
Education and Health Services 240,000 +473,000
Leisure and Hospitality 499,000 -86,000
Other Services 99,000 -71,000
Utilities 11,000 -11,400
Transportation and Warehousing 98,000 -143,500
Government 244,000 -64,000

The figures speaks for themselves, but note that the difference between the total number of jobs the White House forecast would be “created” and the actual number of jobs lost represents an astounding delta of over 6 million jobs. Six million! Where are the jobs, indeed.

Remarkably, even the total number of government jobs dropped, I imagine due to job losses at the state and local levels. And how can the Recovery Act be considered anything other than a complete and utter failure with over 1.5 million fewer construction jobs than forecasted? In spite of endless propaganda over shovel-ready projects, and the nation littered with roadside signs touting Recovery Act projects.

Most damning of all I think is that the job losses I’ve highlighted occurred after President Obama assumed office, and by and large after the stimulus bill was passed and the money began to flow. These are not “inherited” job losses by any stretch.

Defenders of the White House argue that the economy was in more dire shape than they realized at the time, and that the employment situation would be worse without the stimulus bill. This may be the case, but it doesn’t change the fact that the Administration and their allies in Congress rammed through an unprecedented $787 billion in spending – much of it having little to do with economic stimulus – based on flawed assumptions and overly optimistic forecasts.

It’s simply irrefutable that the Recovery Act has not had the beneficial impact projected by the White House. In fact, based on the data alone it’s arguable that the net impact has been detrimental to the economy, especially in combination with other legislation and policy changes enacted by the Administration and the Democrat-led Congress.

While Democrats would like to blame their declining political fortunes on a climate of fear stirred up by the GOP and conservative media, mainstream America recognizes incompetence and mismanagement when they see it. Saddling our children and grandchildren with $787 billion of debt (plus interest), while presiding over the loss of millions of more jobs – and yet brazenly claiming that they somehow “saved or created” 3-4 million jobs – is a disgraceful legacy of failure and deceit from which there is no escape. November is coming.


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Posted Sep 5th 2010 at 4:49 am in Congress, Economics, Featured Story, Federal Spending, News, Obama, Politics | 137 Comments