Prior to Obama’s Inauguration on January 20th, his economic team released a model projecting what the American Recovery and Reinvestment Plan would do to the US economy and how many jobs it would create, etc. The report was written by Christina Romer and Jared Bernstein. The report in full is available here.
I would like to turn attention to Figure 1 which is located on page 4. That figure shows the estimated unemployment rate WITH the economic recovery package versus the unemployment rate WITHOUT the economic recovery package.
Now, this was prior to the passing and final draft of the AEEP. However, they took estimates as to the size and scope of the plan and by and large, they were fairly accurate. The final bill is estimated at costing $787 billion dollars while it was estimated in this report to be around $775 billion. The bill was signed into law less than four weeks after taking office.
Now, back to Figure 1. As can be seen, they estimated that by this time (June 2009), the unemployment rate WITHOUT the stimulus package would have been about 8.2%. With the economic package, it would have been a whopping 7.9%. That’s a full 1.5% lower than what the BLS estimates the unemployment rate to currently be.
Obama’s economic models, much like his policies, are failing horribly when tested against reality. It’s quite clear that Obama’s models are horribly inaccurate and overly optimistic, given that it was expecting the economy to turn around almost immediately upon his arrival at the White House as well as the magnitude of that error in analysis and prediction.