President Obama’s stimulus has been given mixed reviews due in large part to the current US jobless rate. With unemployment hovering just below 10 percent, these are the worst unemployment numbers in more than a quarter-century. In the past two years, 7.7 million jobs have been lost in the United States and two million jobs have disappeared since Congress passed the stimulus plan.
Despite the public’s understandable preoccupation with jobs, the success of the stimulus plan, known as the American Recovery and Reinvestment Act (Recovery Act), must be gauged by more than current unemployment figures.
The President’s stimulus package helped rescue America from the brink of an economic abyss. “[I]t is largely thanks to the recovery act that a second depression is no longer a possibility,” Obama said. Many states and local governments owe their fiscal survival to the stimulus and thousands of projects were initiated with stimulus money. “There has never been a program of this scale, moved at this speed, that has been enacted as effectively and as transparently as the recovery act,” the President declared.
There is strong evidence to support the President’s assessments. The economic growth in recent months lends credence to the claim that the US is on the road to recovery. The gross domestic product was sinking at an annual rate of 6.4 percent at the beginning of last year, but is now growing at a rate of 5.4 percent. Most economists agree that the infusion of federal money has contributed to the impressive growth.
Despite these historic accomplishments, the efficacy of Obama’s stimulus efforts is being obscured by critics who point to high unemployment. However, these critics fail to acknowledge that jobs are a lagging economic indicator, meaning they trail behind the overall economic cycle.
We are seeing signs of improvement on the unemployment front. Jobless rates, once above 10 percent, dipped to 9.7 percent last month. Job losses have slowed dramatically, from 779,000 in January 2009 to about 20,000 last month, and Obama’s advisers are predicting job growth in the next few months.
The general consensus amongst economists suggests that Obama’s stimulus package was indeed effective, “The stimulus worked,” without it, “the unemployment rate would probably be closer to 11 percent and the economy might not have grown at all last year.” declared Stuart Hoffman, the chief economist at PNC Bank.
The forecast for 2010 anticipates 1.1 million more jobs, many of which will be green. Cleantech investment and job creation continues to play a central role in the recovery. The stimulus plan will provide roughly $70 billion for the nation’s energy economy, most of it for clean energy initiatives.
Many industries are already benefiting from stimulus spending, including those associated with the smart grid, electric vehicles and battery technology. The stimulus allotment to smart grid projects amounts to $3.4 billion in grants. They have been awarded to private companies, utilities, manufacturers and cities in 49 states. Advanced battery and electric vehicle projects have been allotted $2.4 billion in grants and and $300 million in grants will go towards the acquisition of 9,000 alternative fuel and energy efficient vehicles under the DOE’s Clean Cities program.
As a jobs creator, clean tech is proving to be a lucrative investment, providing even better returns than traditional industries. About 30 percent of the jobs are going to be in construction for building retrofits and Robert Poland, Co-Director of the Political Economy Research Institute at the University of Massachusetts, says that investing in building retrofits to weatherize houses will generate many more jobs than investing in oil and gas drilling.
The stimulus is creating new employment opportunities in renewable energy. The solar industry added 18,000 new American jobs in 2009 due to the Recovery Act. “We know that clean energy is a proven job creator,” Senate Environment and Public Works Committee Chairman Barbara Boxer recently told reporters. She cited a 2009 study by researchers at the University of California Berkeley, the University of Illinois and Yale University, which concluded that the Clean Energy and Security Act that was passed last year by the House of Representatives could create between 918,000 and 1.9 million jobs over 10 years. Those jobs would contribute between $39 billion and $111 billion to the economy, the researchers said.
The Senate has yet to vote on the Clean Energy and Security Act and the government has only spent one-third of the money set aside in the Recovery Act. The program (originally estimated at $787 billion, now priced at $862 billion) will continue infusing federal money into the economy into 2011. Over the next 12 months, we could see an additional $300 billion in government stimulus investment.
Vice President Joe Biden has overseen the implementation of the Recovery Act, he recently presented his first annual progress report. Entitled “Recovery by the Numbers,” (pdf) the report concludes that,
The most exciting thing about the Recovery Act is not what we’ve done, but what lies ahead. Many Recovery Act programs that will build the groundwork for the economy of the 21st century will be implemented in the next few months.”
According to Steve Flutter, vice president of Ecomagination, a division of General Electric devoted to renewable energy, there could be 116,000 new jobs just from wind projects this year. The stimulus package also dedicates $20 billion in spending and loan guarantees for a smart electrical grid. Flutter says building a new grid could provide 80,000 new jobs over the next four years.
The Recovery Act not only staved off a second Great Depression and reversed a declining economy, it is driving efficiency initiatives and fueling the new energy economy. It is also providing green jobs while laying the foundation for a more sustainable future.
Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.