Macroeconomic Advisors Reiterates that ARRA Worked

The private sector forecasting company Macroeconomic Advisors now has a blog and it features a post reiterating the firm’s conclusion (one shared as best I can tell by all private sector forecasters) that the American Recovery and Reinvestment Act has boosted GDP and employment:

ARRA fig1

For the interested, the post includes a fairly detailed response to John Taylor and others who’ve criticized the forecasters’ methodology seemingly without knowing what that methodology actually is. They also have these stern words:

Frequently, partisan commentators — and even some economists — exclaim that the stimulus has failed because the unemployment rate now exceeds the peak shown in projections prepared before ARRA was implemented. This argument, which clearly — and perhaps intentionally — confuses the pre-stimulus baseline with the incremental effects of the stimulus, would be laughable if it was not taken so seriously in some quarters. For the record, last spring, as the financial crisis that engulfed the economy worsened unexpectedly — but before the stimulus could possibly have had any real effect on the economy — the unemployment rate already had moved above the Administration’s (and many others’) last pre-stimulus projection. So, this is simple: the baseline forecasts were optimistic, but unemployment would be even higher now without the benefit of the stimulus package.

Last, for folks hoping for a much larger additional fiscal stimulus they have a helpful discussion of the interplay of fiscal and monetary factors.