Economists: Obama Plan Would Notably Boost GDP
Bloomberg
Obama Plan Could Add 2% to U.S. GDP Next Year as Jobs Grow, Economists Say
The U.S. economy would get a boost of up to 2 percent under President Barack Obama’s $447 billion jobs plan, say economists at Goldman Sachs Group Inc., Moody’s Analytics Inc. and JPMorgan Chase & Co.
“The U.S. is on the cusp of a recession,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania. “The plan would go a long way toward stabilizing confidence, forestalling another recession and jump-starting a self-sustaining economic expansion.”
The proposal, which would raise infrastructure spending and cut in half payroll taxes paid by workers and small businesses, would add 2 percent to next year’s GDP, create 1.9 million jobs and lower the unemployment rate by one percentage point compared with current policy, Zandi said...
Unemployment Benefits
A reduction in government spending and the end of the payroll-tax holiday and an expiration of extended unemployment benefits would have cut GDP by 1.7 percent in 2012, according to JPMorgan chief U.S. economist Michael Feroli. Instead, the Obama proposal more than makes up for that potential loss and may add a net 0.1 percent to the economy, he estimates.
“It offsets what would otherwise have been a huge drag from the fiscal restraint” that was due next year, he said. “The plan reduces the risk of a recession in 2012, though it doesn’t do much for growth in the second half of this year.”
Goldman Sachs estimated the plan would add 1.5 percent to the economy, while Macroeconomic Advisers LLC said 1.3 percent and UniCredit Research, up to 2 percent.
“This plan would reduce the odds of a recession to very low levels,” said Joel Prakken, senior managing director of Macroeconomic Advisers in St. Louis, which estimated it would add 1.3 million jobs next year. “The biggest immediate boost is from consumer spending from the payroll-tax holiday and extension of unemployment benefits. If people get more income, they will spend it.” ...
Obama Plan Could Add 2% to U.S. GDP Next Year as Jobs Grow, Economists Say
The U.S. economy would get a boost of up to 2 percent under President Barack Obama’s $447 billion jobs plan, say economists at Goldman Sachs Group Inc., Moody’s Analytics Inc. and JPMorgan Chase & Co.
“The U.S. is on the cusp of a recession,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania. “The plan would go a long way toward stabilizing confidence, forestalling another recession and jump-starting a self-sustaining economic expansion.”
The proposal, which would raise infrastructure spending and cut in half payroll taxes paid by workers and small businesses, would add 2 percent to next year’s GDP, create 1.9 million jobs and lower the unemployment rate by one percentage point compared with current policy, Zandi said...
Unemployment Benefits
A reduction in government spending and the end of the payroll-tax holiday and an expiration of extended unemployment benefits would have cut GDP by 1.7 percent in 2012, according to JPMorgan chief U.S. economist Michael Feroli. Instead, the Obama proposal more than makes up for that potential loss and may add a net 0.1 percent to the economy, he estimates.
“It offsets what would otherwise have been a huge drag from the fiscal restraint” that was due next year, he said. “The plan reduces the risk of a recession in 2012, though it doesn’t do much for growth in the second half of this year.”
Goldman Sachs estimated the plan would add 1.5 percent to the economy, while Macroeconomic Advisers LLC said 1.3 percent and UniCredit Research, up to 2 percent.
“This plan would reduce the odds of a recession to very low levels,” said Joel Prakken, senior managing director of Macroeconomic Advisers in St. Louis, which estimated it would add 1.3 million jobs next year. “The biggest immediate boost is from consumer spending from the payroll-tax holiday and extension of unemployment benefits. If people get more income, they will spend it.” ...