Obama’s stimulus, in retrospect


A positive effect of the 2009 Obama stimulus appeared only long after its forecasted date.

Many people remember that President Barack Obama warned that the unemployment rate would rise to a high level without a stimulus program. In January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus.1 That plan passed.

Stimulus projections from the Obama Administration. Click for larger.
That paper included a table projecting what employment levels the country would experience with, and without the stimulus. For the fourth quarter of 2010, the authors estimated payroll employment would be 133,876,000 without the stimulus, and 137,550,000 with the stimulus. That’s a gain of 3,673,000 jobs due to the stimulus, estimated the authors.

What was the actual experience in jobs? First, for a look at the projections regarding the unemployment rate, see Holding politicians to their boasts and promises. The promoters of the stimulus also projected employment levels, that is, the number of jobs.

To examine the effect on jobs, I gathered data from the Bureau of Labor Statistics and compared the results to projections. I used seasonally adjusted data, which is only slightly different from the non-adjusted data.2

Actual employment with lines showing forecasts of employment with and without stimulus. Click for larger.
Employment exceeded the forecasted level with the stimulus in January 2014, when seasonally adjusted employment reached 137,574,000. (Employment exceeded the forecasted level for the economy without the stimulus in May 2012, when seasonally adjusted employment reached 133,951,000.)

What was projected (or promised) for the fourth quarter of 2010 wasn’t achieved until January 2014. That’s three years late.

The lesson, I believe, is that the power of government to affect the economy in a positive way is weak and limited, especially when using the Keynesian tools of attempting to manage aggregate demand.3 It’s even more true at a state level, as the tools state governments can use are weaker than the federal government’s.


  1. Romer, Christine, and Bernstein, Jared. The Job Impact of the American Recovery and Reinvestment plan. https://www.economy.com/mark-zandi/documents/The_Job_Impact_of_the_American_Recovery_and_Reinvestment_Plan.pdf.
  2. The BLS data series are:
    CES0000000001, series title All employees, thousands, total nonfarm, seasonally adjusted
    CEU0000000001, series title All employees, thousands, total nonfarm, not seasonally adjusted
  3. For criticims of Keynesian economics from free market perspectives, see
    Mitchell, Daniel J. Keynes Was Wrong on Stimulus, but the Keynesians Are Wrong on Just about Everything. https://www.cato.org/blog/keynes-was-wrong-stimulus-keynesians-are-wrong-just-about-everything.
    Gerald P. O’Driscoll Jr. Keynes vs. Hayek: The Great Debate Continues. https://www.cato.org/publications/commentary/keynes-vs-hayek-great-debate-continues.
    Richard B. McKenzie. John Maynard Keynes, R.I.P. https://fee.org/articles/john-maynard-keynes-rip/.
    Hans-Hermann Hoppe. The Misesian Case against Keynes. https://mises.org/library/misesian-case-against-keynes.


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