Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from April 2012 Through June 2012

The Congressional Budget Office provides estimates of American Recovery and Reinvestment Act’s (ARRA) impact on employment and economic output in the second quarter of calendar year 2012 (April 2012 through June 2012), as well as over the entire period since February 2009.

CBO estimates that ARRA’s policies had the following effects in the second quarter of calendar year 2012 compared with what would have occurred otherwise:

• They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 0.8 percent,
• They lowered the unemployment rate by between 0.1 percentage points and 0.6 percentage points,
• They increased the number of people employed by between 0.2 million and 1.2 million, and
• They increased the number of full-time-equivalent (FTE) jobs by 0.2 million to 1.3 million. (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.)

CBO estimates that the legislation will increase budget deficits by about $833 billion over the 2009–2019 period. By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and more than 90 percent of ARRA’s budgetary impact was realized by the end of June 2012. The effects of ARRA on output peaked in the first half of 2010 and have since diminished, CBO estimates. The effects on employment are estimated to lag slightly behind the effects on output; CBO estimates that the employment effects began to wane at the end of 2010 and continued to do so through the second quarter of 2012. Still, CBO estimates that, compared with what would have occurred otherwise, in 2012 ARRA will:

• Raise real GDP by between 0.1 percent and 0.8 percent, and
• Increase the number of FTE jobs by between 0.2 million and 1.2 million.