Estimated Impact of ARRA on Employment and Economic Output From October 2010 Through December 2010

The Congressional Budget Office now estimates that the American Recovery and Reinvestment Act of 2009 (ARRA), also known as the economic stimulus package, will increase budget deficits over the 2009-­2019 period by $821 billion -- $7 billion more than what it estimated in its November report. By CBO’s estimate, close to half of that total impact occurred in fiscal year 2010, and about 70 percent of ARRA’s budgetary impact was realized by the close of that fiscal year. CBO also has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy. CBO estimates that ARRA’s policies had the following effects in the fourth quarter of calendar year 2010:

• They raised real (inflation-adjusted) gross domestic product by between 1.1 percent and 3.5 percent,
• Lowered the unemployment rate by between 0.7 percentage points and 1.9 percentage points,
• Increased the number of people employed by between 1.3 million and 3.5 million, and
• Increased the number of full-time-equivalent (FTE) jobs by 1.8 million to 5.0 million compared with what would have occurred otherwise. (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).