The White House Blog: Economy

Reality Check: The Very Real Jobs the Recovery Act is Supporting

Three months ago, the critics denied that the Recovery Act was making any jobs.  Today, everyone – including the critics - can see those jobs for themselves on Recovery.gov.  Now that the evidence has proven them wrong, they are left to cast doubts about just how many jobs were made and where.  But for all of the attempts to distract and distort from the program’s progress, these reports – directly from the recipients of Recovery Act dollars - make one thing indisputably clear: the Recovery Act is now responsible for supporting at least one million jobs across the country. 

It’s time to keep the critics honest.  Here are some of the misleading things you may have been hearing about how we are tracking our progress supporting jobs through the Recovery Act – and the truth behind them:

FICTION: The reports recipients of Recovery Act funds filed are riddled with errors.
FACT: More than 130,000 reports were collected from recipients who were required to fill out 99 different data fields – that's over 12 million pieces of information collected directly from those putting the funds to work.  Much has been made of incorrectly coded Congressional Districts, but that issue – which the Recovery Board has already fixed – affected about 1 percent of reports.  And other potential over or under-counts of jobs you may have seen highlighted in the media amount to less than 5 percent of all reports.

FICTION: The Administration is misleading people about where Recovery Act money is going.
FACT: The reports you see on Recovery.gov were filed by over 130,000 recipients of Recovery Act dollars and they were responsible for inputting the information – including their Congressional District.  We don’t expect that these recipients – many of which are small community organizations or businesses - will do this perfectly the first time out of the gate, but we do take our role reviewing the reports very seriously and continue to work with the recipients to improve the accuracy of their reports.  The fact is, though, that the errors you are seeing are simply typos or basic human error.

FICTION: The jobs that were listed in non-existent Congressional Districts were not real.
FACT: The jobs and related projects listed are legitimate – they were just coded in the wrong Congressional District.  The Recovery Board moved quickly to correct the coding and posting error – but before that happened, the public was still able to click through to find the address of the recipient and confirm their correct Congressional District on their own.

FICTION: The Administration has failed to meet expectations it set for the quality of data it would collect.
FACT: From the beginning, even before the data was collected, Administration officials said repeatedly that they did not expect the initial reports to be perfect, but certainly expected them to provide an unprecedented and largely accurate look at the Recovery Act at work – and they do.  We will continue to collect this information every three months and we expect the data we collect to get sharper and more precise each time we do it.

FICTION: These errors mean that none of the reports and related jobs numbers can be trusted.
FACT: Overall, less than 5 percent of the reports have been identified as potential over or under-counts of jobs.  That is a lower possible revision rate than most long-standing, widely-accepted government economic indicators.  Take for example:

• Payroll Employment, 2008: Original Average Monthly Decline – 157,000, Revised Average Monthly Decline –230,000, 46 percent lower than original

Independent economist Mark Zandi said it best:

• "Well, these numbers are [verified]. The 600,000-plus estimates from the administration come from recipients of the stimulus aid. And, so, we know for sure that these jobs are for real.  Now, of course, it doesn't count all of the other jobs created by the tax cuts and other elements of the stimulus. That is much more difficult to count, at least directly. But the 600,000-plus, that's numbers that are counted directly and accurate...  All of the statistics that we get on the economy that the government collects are based on surveys and samples, similar to the one that was conducted here. So, I think they are using the same approaches and techniques in constructing these estimates then -- that we use for constructing all kinds of estimates to try to get a gauge of where the economy is."  [Newshour, 10/30/09]

FICTION:  The jobs numbers are already lower than expected – and this lack of credibility just makes the case for the job impact of the Recovery Act even weaker.
FACT:  In fact, economists say that, because the reports cover less than half of the money put to work so far and only direct jobs, they point to a job impact of at least double what was reported.  So even if reports totaled only 500,000 jobs – not the over 600,000 reported – it would still confirm Administration and independent estimates of over 1 million jobs. 
But don’t take our word for it.  Here is what economist John Irons, who is testifying before the House Oversight and Government Reform Committee on Recovery Act jobs today, had to say:

• "New data from recipients of grants, loans, and contracts made under the Recovery Act count about 650,000 new jobs created or retained to date, one of the strongest signs yet that the Recovery Act has led to significant job creation. The data, which reflect a fraction of all the Recovery Act investments made to date, are consistent with other estimates of jobs creation showing that between 1.1 and 1.5 million jobs have been created or preserved as a result of the stimulus package to date. It follows recent news that the economy as a whole grew by a 3.5% annual rate in the third quarter, another indication that the Recovery Act has provided a much needed spark to the economy."  [Economic Policy Institute, 10/30/09]

FICTION: The Administration already had to remove 60,000 inaccurate jobs from the website – who knows what other inaccurate items they’ve posted that should come down.
FACT: The Administration worked with the Recovery Board to have 60,000 over-counted jobs removed from the list before it was ever posted on Recovery.gov in order to dramatically increase accuracy pre-posting.  Items flagged as possible over or under reports since the data was posted on Recovery.gov are a fraction of this size, indicating the vast majority of errors were caught before then.

Liz Oxhorn is Recovery Act Communications Director

Pursuing Economic Growth and Opportunity

Today we concluded a weeklong trip to Asia. In our closing meeting with President Obama and Chinese Premier Wen, leaders of our two countries reiterated their commitments to renew old alliances and forge new partnerships.

Throughout the past week, we have made strides toward our goal of strengthening U.S. leadership and economic competitiveness in the region and making progress on issues that matter to the American people and leveraging that progress into job creation at home.

From a trade perspective, the steps we’ve taken in Asia will benefit businesses and workers across the American economy – ranchers, farmers, manufacturers, and creative industries all have a future in U.S. trade with Asia.

As companies across the spectrum look for a way forward out of these difficult economic times, we’re asking them to take a second look at trade.  Because engaging new customers abroad can create jobs at home.

President Obama began his trip to Asia by making an announcement in Tokyo that the United States will engage with the Trans-Pacific Partnership. This will be done in close consultation with the United States Congress and with stakeholders at home. This is an exciting opportunity for the United States to engage with some of the fastest growing economies in the world as well as providing the opportunity to address gaps in our current agreements, and to set the standard for 21st-century trade agreements going forward.

Empowering U.S. Companies to Compete Abroad

It's been over a week since we first arrived in Asia. First, we traveled to the Asia Pacific Economic Cooperation (APEC) Summit in Singapore, and now we have joined President Obama in Beijing, China. We have come to this important region to engage our counterparts to strengthen our economic relationships, further open Asian markets to American exports and create well-paid jobs at home.

The 21 countries that make up APEC account for some 61 percent of American exports, and traveling today through the streets of Beijing, it's not hard to see why.

There's a frenetic pace in Asia's big cities, with construction cranes an ever present part of the cities' skylines.

This growth is good news for the people of Asia who have found exciting new opportunities in these cities. But it's also promising news for the workers, small businesspeople, ranchers and farmers of the United States, because selling our goods and services to these markets can put scores of Americans back to work and get our economy growing again.

And that is fundamentally why we are here this week. We're trying to open up markets for American products and ensure that our businesses are able to compete on a level playing field in the global economy.

During our time in Asia, we've been meeting with various ministers from Asian governments as well as representatives of the American business community like the U.S.-China Business Council and the American Chamber of Commerce in China.

We are also taking the opportunity on this trip to talk about recent trade disputes and how such disputes are ultimately a healthy part of a mature trading relationship.

The United States is the most open major economy in the world and the Administration is committed to ensuring our borders will remain open to the world’s products.

But that commitment will be met by a renewed focus on doing more to enable U.S. companies to compete in foreign markets.

Ultimately, that will be good for everyone. U.S. technology and know-how can be of great benefit to countries throughout Asia. For example, as countries like China strive to reach ambitious clean energy and efficiency targets, they will depend on expertise of U.S. firms with a proven record of success in these areas.

This year, we have already made great progress in creating a freer, fairer trade environment with Asia. When we were in China a few weeks ago, our Chinese ministerial counterparts pledged to open up their markets to U.S. wind turbine producers and lifted a needless non-science based ban on the import of U.S. pork.

They also promised significant strides towards protecting the intellectual property of American companies operating within their borders and steps to ensure a more level playing field in China’s government procurement market.

These are important steps that will be good both for the creation of America jobs and the continuance of Chinese growth. And we are seeking to build on the positive momentum this week.

As President Obama recently said "power in the 21st century is no longer a zero-sum game; one country's success need not come at the expense of another."

There is a lot to be gained from cooperation between Asia and the United States, and we are excited to be playing our part to move things forward.

The Big News from the Retail Sales Report

The big news from the retail sales report was that sales rose again and even more than expected--1.4%, which was a full half point more than the consensus forecast.

The core retail spending--the stuff that tends to give a steadier picture and not fluctuate around a lot--rose for the third straight month.  And if you compared the core sales in October 2009 to October last year, it was the first year-over-year increase in 8 months.  In fact, the three-month gain ending in October was the strongest since June 2008. 

This string of gains means that consumer spending is on track to post another gain in the fourth quarter of the year.  From mid 2007 to mid 2009, we had measly growth or outright declines in consumer spending so this is a welcome sign of the beginnings of recovery.

One last thing worth noting in this retail sales report is the fact that consumer spending on motor vehicles posted a big increase.  The report last month showed a decline in sales as the Cash-for-Clunkers program ended.  Some critics argued that the perceived recovery of the economy was only a temporary blip due to people shifting their car purchases forward and sales now would be lower for an extended period.  These data suggest that didn't happen.  They confirm what the private industry sales data already documented. The sales of motor vehicles in October are up to an annual rate that actually exceeds the rate in the eight months before cash-for-clunkers began. 

The President's focus is on recovery and getting people back to work.  Turning the economy around is the necessary first step for job creation.  This report suggests the recovery effort may be picking up steam.

Austan Goolsbee is a member of the Council of Economic Advisers