By Alec MacGillis
Washington Post Staff Writer
Wednesday, January 13, 2010; A13
The $787 billion economic stimulus package has created or saved between 1.7 million and 2 million jobs, but its impact on the economy ebbed slightly in the final quarter of 2009 compared with prior months, the White House said Tuesday night.
Releasing the administration's second quarterly report to Congress on the stimulus's impact, Christina Romer, chairman of the Council of Economic Advisers, said a third of the tax cuts and spending in the package is out the door. Her office estimates that the stimulus added between 1.5 and 3 percentage points to the growth in gross domestic product in the final quarter of 2009. That estimate, which is in line with other analyses, is lower than her office's estimate of stimulus-related impact in the third quarter, between 3 and 4 percentage points.
Administration officials said often last year that the stimulus's impact would be felt more over time as spending ramped up, but Romer said in a conference call with reporters that the drop-off in GDP impact was not unexpected. The biggest jolt to the GDP came with the first big surge of spending over the summer, she said, and job creation is now following.
"The most important bottom line is to say that close to 2 million jobs have been created or saved by the close of 2009, a truly stunning . . . effect of the act," she said. Still, she added, there is a need for additional spending to spur job creation, as President Obama has called for.
Congressional Republicans have questioned the administration's claims about the stimulus's impact, pointing to the 10 percent unemployment rate nationwide. Romer's new figures are based on macroeconomic estimates, not reports filed by stimulus funding recipients, the next round of which is due later this month.
Separately, the White House has announced a change in the way those reports tally jobs, a response to critics that could make the reports more reliable but make it more difficult to gauge the stimulus's impact over time.
For months, economists and government watchdogs have warned that the job-creation reports should be taken with a heavy grain of salt. The administration deserves praise, they say, for trying to provide transparency in how the $787 billion package is being spent -- whom the money is going to, and for what purpose -- but trying to count the number of jobs created or saved may have been a fool's errand that needlessly undermined the credibility of the overall reporting effort.
This has proven especially true when it comes to "saved" jobs, which the administration says count as much as new jobs, since both keep people off the unemployment rolls. Recipients of stimulus money have used wildly different standards to estimate how many employees would have been laid off if not for the funding -- some have reported every job in their business or agency as "saved," while others have reported zero jobs "saved," even after receiving very large contracts.
The job figures have other shortcomings. Since reporting is required only of the top two layers of funding recipients, the data do not capture jobs created further down the line of suppliers or subcontractors. And stimulus recipients have taken different approaches to counting jobs that are created or saved on a part-time or temporary basis.
To address those concerns, the Office of Management and Budget recently issued new rules for reporting job numbers, aimed at ensuring more consistency. Most notably, the rules instruct recipients unsure how to count "saved" jobs to simply estimate how many employees in a given quarter were working on projects paid for by stimulus dollars, regardless of whether they would have been laid off otherwise.
But there is a downside: The shift in rules means that the numbers reported for the last quarter of 2009 and for the remainder of the stimulus cannot be compared with the job numbers from earlier in 2009. Going forward, recipients will no longer be expected to report a total count of jobs created or saved over time, but simply how many jobs were created or saved in a given quarter.
John Irons of the left-leaning Economic Policy Institute called the new rules a "huge improvement," saying that greater consistency among recipients is more important than having a cumulative jobs count. Even under the old rules, such a tally was going to be unreliable, he said, given the difficulty of counting jobs that only last a month or two.
"This is a better way to do it," he said. "You lose consistency between [the last two quarters] but you gain a whole lot of consistency across agencies. . . . It's a cleaner way to do things."