The stimulus was not very efficient at all in terms of # of jobs created. But it DID create many millions of jobs. It's not a coincidence than when stimulus ran dry this year is when job creation stopped. Whether the jobs created were worth the dollars spent is a whole different question - the specifics of the stimulus itself were pretty badly designed.
I believe most of the jobs did come from stimululs...MONETARY stimulus. QE2 had an immediate impact on the markets and after that the job numbers improved. The fiscal stimulus was just a huge waste. Krugman even called it a failure, although he argued it failed because it was too small. In any case, I think it's clear more QE is the way to go. And get rid of the interest on reserves.
Certainly - I'd agree with all of that, though I think the stimulus did create (or save) jobs. I wonder if the ECB move will change whether there is QE3 coming. State government didn't really start shedding jobs until the stimulus funds ran out. The tax cuts are more difficult to measure. But if we built any new infrastructure, that HAS to create jobs somehow or other. But that doesn't mean it was efficient at all.
The ECB is kind of constrained because Germany is doing just fine and inflation I think is running a tad high there. So there is a lot of pressure for them to do nothing. But to save the Euro, they need to be more aggressive. Hopefully they don't wait for the FED. I think the FED could help, but the FED can't buy up Italian bonds (I don't think).
There's no evidence of this at all - many professional forecasters have been explicit about the number (low millions, IIRC) of jobs fiscal stimulus saved, and pretty much uniformlly agree that it arrested the decline of 09 and contributed to the rebound thru 10.... I have seen no such thing with respect to the monetary stimulus.
My problem with the stimulus was the efficiency. For $750B, the government could have just directly created 7.5 million jobs, each paying $50,000 for 2 years - or 5 million jobs for 3 years or whatever. That would have immediately crushed unemployment, and should have spurred lots of demand to hopefully create private sector jobs to take their place when the government funds ran out.
Sure, though the fact that about $200 billion of that "wasteful stimulus" was actually the now-annual rite of AMT relief probably ahs something to do with it. A real trillion dollar stimulus would have helped, given that we were in either the worst, or second worst economic decline ever. But we basically got a half-trillion one.
Martin Feldstein attributed the economic rally at the end of 2010 to QE2. http://www.project-syndicate.org/commentary/feldstein33/English Another economist, Scott Sumner, does so as well. http://www.themoneyillusion.com/?p=9133 We do another round of QE, and we'll see the markets rally again, IMO.
The one at the "end" of QE2? Yeah it juiced the stock market which created an income effect, at least so it theorized, but I don't know how solid the causation here is. How was it not cuased by that year's stimulus funds? here's the graphs on the stimulus "not working" btw
QE2 juiced the market because the market expected it to work to some extent, and it did, as inflation had an uptick and deflation was avoided. The markets hardly reacted the same way to the fiscal stimulus. Unemployment slightly improved at the end of 2010 and early 2011..QE2 started in Q4 2010. All of those GDP numbers in the stimulus charts got revised down recently...so who knows what the real effect was. But to be fair, they were revised down going back several years, and the revision also included the months QE2 was in effect. GDP revisions:
1) - you can argue they did, because it was passed in Feb 09, didn't start to go into effect obviously until march 09 at the earliest, basically the begninning of a reversal into a 2+ year bull market, ending almost precisley at the point in time when they ran out (though I personally might not make theis particular argument). 2) for the same reasons I'm hesitatnt to say that, how do you say "x amount of growht was due to QE2/y amount was due to extra z percent that would not be there but for stimulus spending? Even though $5-600 billion was not enough to launch a rocket-ship recovery, obvoiusly, it still contributed something to GDP (probably 1.x * spending amount, to be precise).
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1) The market typically reacts when something is announced and prices it in quickly, rather than waiting for the policy to actually take effect. See: Stocks sail higher on Fed’s QE2 announcement http://www.pionline.com/article/20101104/REG/101109953 2) There's no real wayto seprate them. I'm just going by the markets reaction coupled the timing of the drop in unemployment and the rise in inflation expectations, both which came after QE2 was announced. I agree the fiscal stimulus had SOME effect though. The arguments in support have boiled down to "it would have been worse if we hadn't done it." Even Krugman called it a failure because it was too small.
Yes, it was too small, as Krugman pointed out at the time, and I agree that the formula for distributing the money could have been better. What the money did do was spare the states a heck of a lot of pain, and jobs, that they are now having to figure out how to operate without. Certainly, that was the case in Texas.
http://www.bls.gov/news.release/empsit.nr0.htm What an ugly jobs report. How can you have a recovery when you have numbers like that? Go check pout the tables on that website.I would say are real unemployment rate is between 10-15%. The amount of discouraged workers is much too high. This is perfect for employers, but not for the American people. They make record profits, can control their payroll with fear of layoffs, and still make good money.
Is this the new liberal battlecry? 09-10's slogan: "Bushes fault". 11-12: "Tea Party's fault". Some of you liberals just need to listen to yourself to see how silly you all sound.
It's clearly the fault of those 20-30 some odd tea party congressman who have been in office for less than a year. Obama can sell this.
