CBO: The Stimulus Didn't Fail, It's Just That The Real Economy Sucks

Economist Menzie Chinn summarizes the latest report from the CBO on the stimulus.

From CBO’s just released Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009 :

…Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects of ARRA.

In other words, the continued deterioration of the economy through the first few months after the passage of ARRA was not due to the stimulus package; rather underlying conditions had deteriorated, and the economy would have been in a worse state in the absence of the package.

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