Stimulus and Jobs Update

The White House released a report today that contradicts an Associated Press report that came out on Monday.

An Associated Press analysis of stimulus spending found that it didn't matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

The White House report - of course - positively spins the unemployment and economic growth effects of the stimulus. In the report:

• Following implementation of the ARRA, the trajectory of the economy changed materially toward moderating output decline and job loss. Indeed, real GDP began rising in the third quarter of 2009, and job losses in the fourth quarter were one-tenth their size in the first quarter. The decomposition of the GDP and employment change by component or sector suggests that the ARRA has played a key role in this change of trajectory.
• The two CEA methods of estimating the impact of the fiscal stimulus suggest that the ARRA added between 2 and 3 percentage points to real GDP growth in the second quarter of 2009; between 3 and 4 percentage points in the third quarter; and between 1½ and 3 percentage points in the fourth quarter. These estimates are broadly similar to those of a wide range of other analysts.
• The CEA estimates that as of the fourth quarter of 2009, the ARRA has raised employment relative to what it otherwise would have been by 1½ to 2 million.

One thing to note is that not all of the money has been released.

• As of the end of December 2009, $263.3 billion of the original $787 billion, or roughly one-third of the total, has been outlayed or gone to American households and businesses in the form of tax reductions. An additional $149.7 billion has been obligated for projects and activities, which means that the money is available to recipients once they make expenditures.

So the question is - who is right? If we didn't implement the American Recovery and Reinvestment Act would unemployment be that much worse? Or was the money another government waste?