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ROBERT SIEGEL, host:

So, the White House says the stimulus package has helped to slow job loss. It is supposed to create or save 600,000 jobs by the end of the summer. What do today's unemployment numbers tell us about whether the stimulus is on track. Well, joining us to give his appraisal is Mark Zandi, the chief economist at moodyseconomy.com. And Mark Zandi, do today's unemployment figures suggest that the stimulus is creating or saving jobs at the intended rate?

Mr. MARK ZANDI (Chief Economist, Moodyseconomy.com): I think it is. We've lost 6.5 million jobs since we started losing jobs back in December of '07. I think without the stimulus we'd have probably lost closer to seven million jobs. So it's still bad, not good, but better than would've been the case without the stimulus.

SIEGEL: You've called this summer the moment of truth for the stimulus. Is the summer when it should be doing its most effective work and how long does the summer last?

Mr. ZANDI: Yes. This is the moment of truth. The main benefit from the stimulus package should hit its apex in the current quarter, Q3, and into Q4 towards the end of the year. And we should start to see that in the form of better retailing, people spending a bit more money in shopping malls and elsewhere. And then hopefully that'll convince businesses to scale back their job cutting. Not that they'll stop this - anytime this year, but hopefully the job losses will abate. And I do think by this time next year the economy will be on much sounder ground.

SIEGEL: And you're saying that the rise of the unemployment rate now to nine and a half percent is at least not inconsistent with the proposition that the fiscal stimulus is working and it's effective.

Mr. ZANDI: No, not at all. I mean you have to realize what we've been through. I mean think back to all the major shocks we've suffered and felt, beginning over a year and a half ago and through the end of last year. And no matter what policymakers did, no matter what the Federal Reserve would have done, what the administration would have done, we would've lost lots of jobs and unemployment would have risen quite considerably. So there's nothing that policymakers could have done to stop the kinds of job losses that we're seeing.

SIEGEL: When you look inside the numbers of the monthly unemployment reports, what can you tell us about where jobs are being created by the stimulus and where jobs are being lost faster than was predicted?

Mr. ZANDI: Well, I think most of the benefits so far have been in state government. A big part of the stimulus package was checks to state governments to try to forestall some very significant cutting that would've occurred there. Now it's been happening anyway because their fiscal problems are very severe, but the stimulus has helped curtail some of those cuts. So, you know, people working at community colleges and at high schools, they may have lost their jobs without those - without that money.

Also I think retailers, they're laying off workers but they would have laid off a lot more if not for the stimulus because, as part of the stimulus, unemployed workers got increased benefits - COBRA payments for health care, food stamps. So I think the jobs in retailing, wholesaling, transportation -the losses there would have been measurably worse without the stimulus.

SIEGEL: Bottom line, you say, the economy looks like it could be recovered sometime this time next year. But should be there another stimulus? Is there a need for a bigger stimulus to get there and to guarantee the recovery?

Mr. ZANDI: Well, I think it's premature to conclude that we need another stimulus; as I said, I think the main impact from the current stimulus package will be felt this summer, fall, later this year. So we should wait and see how well it goes. But I don't think it's unreasonable to think, given the magnitude of the problems that we face, that when we get into early next year, that another stimulus package may be something we need.

SIEGEL: Thank you. Mark Zandi, chief economist for the research for Moodyseconomy.com.

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