Jobs Shrink Faster Than Stimulus Creates New Ones

The Obama administration says the federal government's $787 billion stimulus program and other actions aimed at jump-starting the economy have saved or created more than 1 million jobs so far.

Republicans, who generally voted against the stimulus, are skeptical of that number. They point out that almost 2.5 million fewer Americans are working now than when the stimulus took effect in February.

Of the million stimulus jobs the administration is bragging about, one belongs to Charlie Dilbert. The Ohio man introduced the president at a Labor Day picnic this week, calling himself "living proof" that the stimulus measure is working.

"The company I work for — A&A Safety out of Amelia, Ohio — was awarded work putting up signs and doing other road construction work on highways and state routes," Dilbert said. "These projects are being directly funded by the stimulus package."

Dilbert's boss, A&A Safety President Bill Luttmer, agrees that stimulus road projects have been a boon for his company, which supplies orange traffic signs and the like. But Luttmer says those federal contracts are barely enough to backfill the potholes the recession has left in other parts of his sales and rental business.

"You know it's created opportunity on one hand, which has been wonderful. It's still a dollar more than was there before," Luttmer says. "But the challenge has been that it's working to offset the loss in the sale and rental side."

And that's the problem. The U.S. economy has been shedding jobs faster than the stimulus can grow new ones. An additional 216,000 jobs disappeared last month alone. That's left the Obama administration in the uncomfortable position of taking credit for an economy that's not as bad as it used to be.

"I often quote the vice president, who says, 'Not as bad isn't good enough.' Right. And absolutely what we want is to get to positive job creation," says Christina Romer, who heads the President's Council of Economic Advisers. "But certainly moderating job loss is a step along the way."

Romer says the stimulus program put the brakes on a downward spiral in the economy. And many private economists agree that things are turning around.

"The economy is out of recession because of the stimulus," says Mark Zandi, chief economist for Moody's Economy.com. He believes the U.S. economy has starting growing again largely because of the federal stimulus program. Zandi says without the stimulus, job losses might have topped 3 million since February, when the stimulus began.

"So we lost jobs," he says. "It's been a very, very tough economy. But job losses would have been measurably greater if not for the stimulus."

About 20 percent of the stimulus money has been spent so far. But the unemployment rate continues to climb toward 10 percent. The August rate of 9.7 percent was the highest it's been in more than a quarter-century and worse than forecast when the stimulus was being debated.

So here's the question: Were there more holes than we thought in the nation's economic flat tire? Or is there something wrong with the pump?

Greg Mankiw, who headed the Council of Economic Advisers under President George W. Bush, says there are too many variables to say for sure.

"It's sort of like going to a doctor and saying the doctor has given the patient some medicine and saying how much sicker would the patient have been if you hadn't given him the medicine," he says.

What's clear is that job losses are slowing. And White House forecaster Romer says she is confident that before too long, the nation will start adding jobs again.

"Believe me, no one is looking forward to it more than the president and every member of his administration because we know it's so important to the America people," she says.

It's also important to the president's own political fortunes. As Rep. Barney Frank (D-MA) recently observed, academic economists can have a field day theorizing how the recession might have played out. But no politician ever got re-elected with a bumper sticker that said, "It Could Have Been Worse."

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