In a non-political, budget-wonk kind of way, Office of Management and Budget Director Peter Orszag tells Black Enterprise in an interview that, yes, according to other people's projections, the stimulus package was responsible for all 3.5 percent of the GDP's third-quarter growth, which was reported yesterday. From the interview:
How much of the current growth in the third quarter is the result of stimulus-related activity spurred by the federal government?
Well, the overall growth rate was 3.5% and you can take a variety of models. For example, Goldman Sachs suggests that the Recovery Act added 3.3%. Mark Zandi [economist and co-founder of Moody's Economy.com] says 3.6%. The President's Council of Economic Advisors also says 3.6%. The Congressional Budget Office gives a range of between 2% and 5%. So, average that and call it 3.5%. Basically, they're all in the 3% to 4% range. Therefore one could say that all the growth in the third quarter is attributable to the impact of the recovery act. Another way of putting is, without the recovery act--given these estimates of its impact--the economy would have been flat rather that growing during the third quarter.
It's far from jumping up and down and taunting Republicans and tea-party activists...not that that's Orszag's style. And besides, unemployment is on the cusp of 10 percent--a point Orszag makes in the interview--so, from the White House's vantage point, the GDP number is, basically, just a nice number: when jobs return, the economy will really be getting better.
Coincidentally, unemployment is the number that most indicates how people's lives are going, and, as such, it's the number that carries the most political weight. It would be inappropriate, and politically unwise, for the White House to jump up and down after the 3.5 percent number was released. The struggling working class cares more about whether they have jobs than about GDP numbers.
And, as unemployment could climb into double digits, it's possible that the White House will take a long-awaited hit.
One thing that Orszag wouldn't do, at all, was get into the business of forecasting when unemployment will improve:
So, if everything unfolds the way you foresee it, do you have any timetable on when the job picture might improve?
Rather than getting into that game, I think what I'd like to say is that the current state of the labor market is unacceptable in that unemployment remains too high and too many families are suffering. But rather than providing a sense of false precision of exactly when things will turn, I think the more important thing is to be working as hard as we can to accelerate that date.
Right now, there doesn't seem to be a point, for the Obama administration, in answering that question. The classic political move is to lower expectations for oneself, but doing so would mean saying "we think things will get a bit worse," would shake confidence in the economy, and might have a similar effect as the actual release of a double-digit unemployment figure. The GOP talking point would be: "Obama administration admits the stimulus failed." Forecast improvement, and you may be proven wrong.
Instead, the White House will simply have to take numbers like GDP growth in stride, not make too big a deal out of them, and wait for the lagging indicator of unemployment to rebound--hopefully soon, for the sake of nearly 10 percent of the country, and hopefully before November 2010, for the sake of Democrats.