ARRA and Unemployment

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Should we spend a trillion dollars on new infrastructure, as I suggested this morning? Reasonable people can differ. But this comment via Twitter is sadly all too common:

Didn’t we do this less than 2 years ago? Jobless went from 7.5% to 9.8%. Do it again, Jobless to 11%. Insane!!!

I know this is just a conservative shoutfest talking point these days, but on the off chance that anyone still cares about the actual evidence, a chart of unemployment is below. In February of 2009, when the stimulus bill was passed, the unemployment rate stood at 8.2%. It peaked eight months later at 10.1% and then started to decline. If you want to, you can argue that ARRA had no effect on unemployment over the long term, but there’s really no credible way to argue that ARRA was implemented so fast, and then had such an immediate effect, that it had any serious impact on unemployment up through the fall of 2009. CBO estimates that it lowered unemployment by 0.3% in the third quarter of 2009, and that’s about the biggest impact, positive or negative, you can credibly suggest at that point. “Approximately zero” is probably the best estimate so soon after the law was passed.

The White House prediction that ARRA would lower the unemployment rate to 8% was one of the great messaging fiascos of all time. I hardly blame Republicans for throwing this back in the president’s face. Nonetheless, private forecasts suggest almost unanimously that ARRA did lower the unemployment rate, and in any case, it certainly had nothing to do with the unemployment rate rising in the immediate few months following its passage. Those are just the facts.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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