July 6th, 2010
10:55 AM ET

Stimulus: The big bang is over

Tami Luhby
CNN Money, senior writer

The job market and economy need a serious jumpstart, but the stimulus program likely won't be able to do it.

This summer will be the peak of the $787 billion stimulus program in terms of creating jobs and pumping money into the economy. In fact, the Obama administration is calling it the Summer of Recovery because more than 30,000 miles of highways are being improved, more than 2,800 water projects have been started and 120,000 homes will be weatherized.

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Shifting to stimulus projects
When it was passed in February 2009, the nation's largest stimulus program focused on sending aid to struggling state governments, providing tax relief and augmenting the safety net for the unemployed and low income.

Some 57% of tax benefits and 60% of entitlement money has already been paid out, according to federal data. But only 43% of the funding for contracts, loans and grants has gone out the door.

Now, however, the focus is shifting to infrastructure and other projects that will drive job growth, according to the administration. For instance, President Obama on Friday announced 66 new stimulus-funded broadband projects nationwide that officials say will create about 5,000 jobs immediately and spur long-term economic development.

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Struggling economy
Bethune, however, says that the government's projections are overly optimistic. Though he agrees that the Recovery Act has juiced the economy, he feels it's closer to a 1 percentage point increase in the gross domestic product in the first quarter, rather than that 2.5 to 2.9 percentage point hike estimated by the White House's Council of Economic Advisers.

"Just look at the number of jobs we created over the past four quarters," he said. "There haven't been a lot."

Unemployment slid to 9.5% in June even as 125,000 jobs were lost. The vast majority of those losses, however, were temporary Census workers. Private sector employers added 83,000 positions.

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Filed under: Economy
soundoff (3 Responses)
  1. Charles

    Forgot to add...unemployment benefits encourage people not to work. Many who are unemployed may not be worth what their previous salaries were. Take an individual that had a median household income of $48,500. Any job CURRENTLY available that pays $9.35 in a 40 hour week is asking this individual to work for free. The individual is a fool to take this job when the government will pay him the same for sitting at home. Consequently, someone on unemployment will only work for the difference between what they get paid to be idle and what a current employer will offer. End the benefit and I guarantee all the help wanted adds you see in your newspaper everyday will go away. Strange how you see all these help wanted adds since everyone is saying there are no jobs. MEDIA...do your job. Tall all sides of the story. People elect not to work because in many cases it is to their benefit.

    July 6, 2010 at 8:37 pm |
  2. Charles

    The so-called stimulus, net, will not create one job. If Americans were allowed to keep their money, the money would have spread over the economy different ways, thus creating demand and expanding industrial production in different sectors of the economy. If the federal government did absolutely nothing, we'd come out better, i.e., no zombie companies artificially created and dependent on government funding in perpetuity. Government does not have any money. Ultimately it is the private sector that is the engine of growth...the private sector expands the pie. All the malinvestment over the last 97 years has destroyed the purchasing power of the middle class and poor. Of course, the media and liberals will blame everything but the government...but the government is the problem because it doesn't foster policies that give high rates of return on capital. Capital and innovation is what counts...not handouts and short term measures designed to create political constituencies and get politicians re-elected.

    July 6, 2010 at 8:27 pm |
  3. Stuart C.

    This is the closest thing to this subject I could find. I am one of the millions who lost their UI benefits last month due to the Senate impasse. We are in desperate need of having the extension passed this month! This problem has gotten so little media coverage, and I don't know why. Please make people aware of the extent of this problem.

    Thank you.

    July 6, 2010 at 4:02 pm |

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