As part of President Obama s fiscal stimulus package, the Council of Economic Advisers was required to make quarterly reports to the Congress on the role that the stimulus package played in economic recovery. The chairperson of the council, Christina Romer from U.C., Berkeley, was charged with the difficult task of assessing the efficacy of the stimulus package and the council delivered its first report to the Congress in September 2009.
The council examined the effects of the stimulus project in several ways. First, it used statistical methods to suggest that both employment and economic growth were higher in the second and third quarters of 2009 then would have been predicted by statistical models. This method, however, does not distinguish between the effects of the stimulus package and other economic interventions such as monetary policy. Second, the council used conventional economic models to estimate the effects of the stimulus essentially assuming conventional multipliers for government spending and taxes. Third, the council compared international experiences of countries that used different stimulus strategies and argued that those countries that had the most ambitious programs of fiscal stimulus improved the most.
The council estimated that the stimulus package avoided a loss of about 1 million jobs by August 2009. But critics pointed out that unemployment was near 10 percent and most forecasters were still projecting high unemployment for several years. Even if the stimulus package did have a positive effect, the lingering effects of the recession would still be painful.