White House Adviser: Stimulus is Working — But Unemployment Could Grow in 2010

By Lindsey Ellerson

Jul 2, 2009 2:42pm

ABC News’ Rick Klein reports: Despite new figures documenting surprisingly high job losses last month, the Obama White House is arguing that the massive stimulus bill the president pushed for is making things better than they would have otherwise been — even though that’s not readily obvious from the statistics.   Jared Bernstein, chief economist and economic policy adviser to Vice President Joe Biden, said on ABCNews.com’s “Top Line” today that the latest jobs report doesn’t tell the full story.   “That doesn’t mean that our other economic plans are not taking hold,” Bernstein said, “whether you’re talking about financial stabilization; I could talk to lots of signs in credit markets; I could point to retail sales, I can even point to the fact that the Recovery Act contributed $17 billion to personal income last month. I mean these are numbers that are on the books. I can tell you that 20,000 Recovery Act projects have been approved. We’ve spent out, I mean, we’ve obligated $160 billion.”  “So there’s no question our plans are working to offset some of the pain, but the depth of the recession is just obviously very significant.” Though the stimulus promised quick cash for “shovel-ready” projects, the latest report showed steep job losses in construction and manufacturing. Bernstein said stimulus spending will ramp up in the months to come — and said the job losses would have been worse without the spending that’s already taking place. The problem with that type of analysis is it doesn’t ask the question, how bad would these numbers, especially on the construction side, would be in the absence of the stimulus program,” Bernstein said. “Those [job] losses — and this is always a hard thing to explain — but those losses would definitely be greater were these projects not in the system.”   Asked about the possibility of a second stimulus, he said: “I think with the largest stimulus package in the history of this country, 130 days old, it would be premature [to discuss]. . . . Let’s give this medicine a chance to course through this economic patient here and reevaluate as we go along.”  And, despite initial predictions that the stimulus would crest below 8 percent this year if the stimulus went into effect, Bernstein said unemployment appears likely to continue to rise into next year. “The unemployment rate will likely be higher in 2010 than in 2009, just as it’s ramped up over the course of the year. In that sense you’ve got a tougher labor market,” Bernstein said.  “However, the forecasts are quite consistent in the observation that the economy — at least in a GDP sense — should begin to recover later this year. Now from our perspective — the administration, the president, the White House — it’s not a recovery until we see robust monthly job growth, month after month. GDP growth without jobs, that’s not how we define recovery.”  “You know — less bad is not what we’re looking for here,” he said.  Click HERE to see the full interview with Jared Bernstein.  We also spoke with Politico’s Jonathan Martin about the week in politics, including the growing number of Republicans who are calling on Gov. Mark Sanford, R-S.C., to resign his post.  Martin wrote a widely discussed piece this week exploring the finger-pointing and backbiting that’s continuing between former McCain campaign aides, over the subject of Gov. Sarah Palin, R-Alaska. Watch the full interview with Jonathan Martin HERE. 

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