Here is the CBO's latest estimate of the impact of the ARRA:
Estimated Impact of the Stimulus Package on Employment and Economic Output, CBO: ...A CBO report released this afternoon ... provides CBO’s estimates of ARRA’s overall impact on employment and economic output in the second quarter of calendar year 2010. ...
When ARRA was being considered, CBO and the staff of the Joint Committee on Taxation estimated that it would increase budget deficits by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total impact over the 2009–2019 period will amount to $814 billion. Close to half of that impact is estimated to occur in fiscal year 2010, and about 70 percent of ARRA’s budgetary impact will have been realized by the close of that fiscal year.
CBO’s Estimates of ARRA’s Impact on Employment and Economic Output
Looking at recorded spending to date as well as estimates of the other effects of ARRA on spending and revenues, CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies on the economy and using various mathematical models that represent the workings of the economy. On that basis, CBO estimates that in the second quarter of calendar year 2010, ARRA’s policies:
- Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,
- Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
- Increased the number of people employed by between 1.4 million and 3.3 million, and
- Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million compared with what those amounts would have been otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)
The effects of ARRA on output and employment are expected to gradually diminish during the second half of 2010 and beyond. The effects of ARRA on employment and unemployment are expected to lag slightly behind the effects on output; they are expected to wane gradually in 2011 and beyond.
Although CBO has examined data on output and employment during the period since ARRA’s enactment, those data are not as helpful in determining ARRA’s economic effects as might be supposed because isolating the effects would require knowing what path the economy would have taken in the absence of the law. Because that path cannot be observed, the new data add only limited information about ARRA’s impact. ...
"The effects of ARRA on output and employment are expected to gradually diminish during the second half of 2010 and beyond," and it doesn't look like the private sector is ready yet to take up the slack.
There is a real risk of extended stagnation or even further decline, but monetary and fiscal policymakers don't seem to fully recognize the threat we face and the urgency to do something about it. For once, it would be nice to see policymakers get out in front of a threat and head it off before it does damage instead of waiting until the threat becomes a reality and then trying to play catch up. That hasn't worked to date, and it won't work now.