CBO: Effects of the Stimulus Spending Are Now 'Diminishing'

ABC News' Ann Compton reports:

The Congressional Budget Office has weighed in on the effects of the government’s stimulus spending this past summer and concludes that the Recovery Act raised the GDP, lowered unemployment, and increased the number of people with jobs, but the range of numbers is very, very broad. The CBO also suggests the major effects of the stimulus peaked during what the administration once called the Summer of Recovery, are diminishing, and will “wane gradually” during these final months of 2010.

Price tag: CBO says the original price tag of $787 Billion is actually going to be higher for the 10 year period: $814 Billion spent into the economy 2009-2019.

Jobs: CBO counts them differently than the Recovery Act, but concludes based on economic models that in just the third quarter, July through September, stimulus spending “increased the number of people employed by between 1.4 million and 3.6 million.” (Vice President Biden claims “millions” of jobs have been created and at one point forecast 500 thousand additional jobs a month, an optimistic prediction that did not come true in monthly government reports.)

Impact: Without declaring the impact over, CBO estimates 70% of the budget impact ended with fy2010. It suggests the impact on growth peaked and is now “diminishing” and the impact on unemployment will “wane gradually” in the current fourth quarter.

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