The president’s chief economic advisor issued a report recently saying the $800 billion dollar stimulus package passed last year has so far resulted in between 2.5 million and 3.6 million jobs being created or saved nationwide. How has this number been arrived at? Did someone go around and count the jobs? N.C. State University extension economist Mike Walden explains.
“Well no, they didn’t. In fact now some people would say, ‘Well, why not?’ Now that would be a massive, very expensive effort. So what the president’s economist did is fairly typical: They developed a model — if you will, an abstraction — of the economy which they used to predict at any point in time how many jobs we would have expected to have in the economy. They then said, ‘OK, if we did not have this stimulus package, how many jobs would we have expected to have and then if we did have the stimulus package would we expected to have?’ And that is where we they got the 2.5 to 3.6 million jobs. Their model told them that if the stimulus package was there, we would have this additional number of jobs created or saved. And incidentally what a job saved means is a job that would have been lost if it hadn’t been for the stimulus package.
“Now you could imagine … these are results that are very controversial. Certainly one area where economists, and it doesn’t matter what perspective they are coming from, can criticize is well is the model that the president’s economist used, is it an accurate model? Is it a good model? Did it include some things, all things that should have been included, or did it exclude some things that should have been included?
“So I do want to make the point that this is an estimate. It is not an estimate arrived at by actually counting people. And the estimate is going to be just as good as the economic model is.”