The Impact of Unemployment Insurance Expansion on Aggregate Employment during The Great Recession – Christopher Boone, Arindrajit Dube, Lucas Goodman, Ethan Kaplan

A Decade After the Preventable, Reckless, Incompetence-Driven GREAT Economic Meltdown, CORPUSVEC SOVEREIGN TALENTS CHANCELLERY INSTITUTES are Minded to devote a Select Leading Articles to The Billions of Unwilling Casualties by Collateral Damage, Interrogate the Unpunished Gross Incompetence of Responsible Persons/Institutions and INSPIRE Radical Critical Thinking to Cushion, if not Firewall the Impacts of Future Recessions on non-Contributory Citizens-Electors who were lampooned with dehumanizing Doctrinaire Austerity Measures while the Culprits were Rewarded with Showers of Bailouts. CORPUSVEC SOVEREIGN TALENTS continues to be alarmed about the Resistance to Constructive Fundamental Change in Establishment Attitudes to Protect Citizens against Future Recessions, the Business-As-Usual Recruitment Practices and its Implications for Sustainable Democratic Governance. Observably Obscenely, some of those whose Incompetence was so Registered in allowing the GREAT Recession have gone on to be handsomely rewarded with Life-Peerages [Careers for Life], Lucrative Private Sector Directorships and Speaking Engagement Fees whereas Citizens continue to be overburdened with Mounting Household Debt which could trigger another GREAT Recession.

 

The impact of unemployment insurance expansion on aggregate employment during the Great Recession

08 January 2017

The Unemployment Insurance programme in the US was significantly expanded during between 2008 and 2014. This column examines the effect of unemployment insurance duration on aggregate employment during the Great Recession using state-level expansions and contractions in insurance generosity. It finds a positive but not statistically significant employment impact of expanding the insurance. This suggests that the substantial insurance value of the extensions during the Great Recession was not offset in any meaningful way by any costs from weaker job growth.

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Between June 2008 and January 2014, the Unemployment Insurance (UI) programme in the US was expanded significantly as unemployed workers became eligible to receive up to 99 weeks of UI payments, compared to the usual 26 weeks available before the Great Recession. Starting in November 2008, generosity also began to vary substantially across states. This unprecedented UI expansion provides a unique opportunity to study the aggregate employment effects of UI benefit duration.

A large body of research has studied the effect of UI duration on the labour supply and job search behaviour of individuals, including during the Great Recession (e.g. Rothstein 2011, Farber and Valetta 2015). However, the macro effect of the policy may differ from the micro effects both by stimulating aggregate demand (Summers 2010, CBO 2012), or by increasing reservation wages and reducing vacancies (Mitman and Rabinovitch 2014).  In a recent paper, we examine the effect of UI duration on aggregate employment during the Great Recession using state-level expansions and contractions in UI generosity (Boone et al. 2016). We provide transparent evidence on employment dynamics around sharp and durable changes in UI benefits across counties that were otherwise very similar, and we provide a reconciliation of the differences in findings across existing papers. Overall, we find a small, positive and statistically insignificant employment impact of expanding unemployment insurance by 73 weeks.

Unfortunately, the nature of the UI extensions during the Great Recession makes studying this question very difficult. In order to target more generous benefits to those areas in greatest need, the benefit extension programmes were structured to grant longer benefit lengths to states with higher unemployment rates.

This targeting makes it difficult to determine the impact of UI on employment by simply comparing states with more generous benefits to those with less.  If we observe a negative relationship between UI duration and employment, is this because more generous unemployment insurance leads to lower employment?  Or is it simply because those states with weaker labour markets were targeted with additional benefits? As we show in our paper, consistent with policy endogeneity, counties that ended up with more generous benefit payments were ones that exhibited lower employment growth in the four years prior to the 2008 benefit expansion.

To avoid this reverse causality problem, we use a border discontinuity design, where we compare 1,161 county pairs that straddle the border between two states, such as Allegany County, Maryland, and Bedford County, Pennsylvania. Within each pair, counties share a similar geography and economic environment, but may have access to different lengths of benefits, largely due to the economic situations in the rest of the state. By comparing neighbouring areas we are much better able to account for possible policy endogeneity. For this reason, the border discontinuity design has become popular, and has been applied to studying various policies, including the minimum wage (e.g. Dube et al. 2010). To purge remaining endogeneity, we also present results for the subset of county pairs that exhibited similar employment trends during the period prior to treatment.

We then compare changes in county employment to changes in the maximum length of benefits within each pair over the course of the Great Recession. In addition to using all policy variations over this period, we also separately focused on two major policy changes:  one that expanded benefits in November 2008, and one that eliminated all extended benefits at the end of 2013.  Both of these events led to differential changes across state boundaries.  The advantage of these specific event studies is that they further deal with policy endogeneity, as these changes were prompted by shifts in national policy rather than fluctuations in individual state economic performance.

Our baseline results suggest that extending benefits by 73 weeks increased the employment-to-population (EPOP) ratio by 0.2%, a negligible amount that is not statistically significant. While our employment estimates are not statistically distinguishable from zero, they do rule out moderate-sized negative employment effects of the UI extensions on EPOP of 0.5% or more.  To put this in perspective, the overall drop in EPOP during the Great Recession in our sample was 3%.

These conclusions are reinforced when evaluating dynamic evidence from our first-difference distributed lag specifications. For the full sample using our preferred set of controls, we find that employment levels remained essentially unchanged over a 36-month window that includes 24 months after treatment.  These results are displayed in Figure 1, which shows no evidence of a negative employment response to an increase in UI benefits (at date 0).  Nor do we see evidence of ‘anticipation effects’ prior to the introduction of differential benefits.

Figure 1 Cumulative response of EPOP from a 73-week increase in maximum benefit duration, comparing counties across state borders (distributed lag specifications)

Event studies for the 2008 introduction and 2014 expiration also show qualitatively similar results. These findings are summarised in Figure 2, which plots the pooled employment response to national level policy changes, namely the 2008 expansion and the 2014 expiration of the extended UI benefits. When the policy change occurs at event date 0, there is a clear increase of around 10 weeks of additional benefits in one side of the border as compared to the other, and this change is quite persistent. Despite the sharp increase in UI benefits, employment appears to remain largely unchanged over the following 12 months.

Figure 2 Cumulative response of EPOP and UI benefit duration difference across state borders (pooled 2008 expansion and 2014 expiration of Emergency Unemployment Compensation programme)

In addition to estimating the employment impact of UI expansion, we also interpret our results in light of a standard labour supply effect and a simple aggregate demand effect. We consider the standard labour supply effects from the literature, especially the estimates coming from the Great Recession. Our macro effects are generally more positive than suggested by the micro labour supply effects. We interpret the gap between the two as due to a Keynesian aggregate demand effect.   Our macro employment estimates are consistent with a range of fiscal multipliers centred around 1 when we consider the typical range of micro effects of UI estimated during the Great Recession.

The results in our paper contrast with two recent papers by Hagedorn et al. (2016), and Hagedorn et al. (2015).  Like us, they employ a strategy comparing county pairs which straddle state borders, but they find a substantial negative effect of UI on employment. In our paper, we provide a detailed accounting of why our result is different from theirs. We focus on the two most important differences here. First, we use employment data from the Quarterly Census of Employment and Wages (QCEW), instead of imputed unemployment data from the Local Area Unemployment Statistics (LAUS) produced by the Bureau of Labor Statistics. The QCEW data is an administrative census on employment capturing 98% of jobs. In contrast, county level employment data from LAUS is imputed in part using state-level data, reintroducing state level endogeneity that the county border pair method is designed to purge. In some cases, the use of revised LAUS data also sharply changes the findings (e.g. in Hagedorn et al. 2016). Second, we eschew the Hagedorn et al. (2015) approach to dealing with expectations by quasi-forward differencing the dependent variable, as this filtering can produce misleading results. Instead, we show 12 leads at the monthly level as transparent evidence that the policy anticipation concerns that Hagedorn et al. (2015) are worried about do not play a noticeable role in our estimates.

An additional paper that finds different results from ours is the case study of Missouri by Johnston and Mas (2015). They find a macro employment effect that is substantially more negative than ours, and similar in size to their estimated micro effects. The most important difference between our papers is that their macro estimate is from one particular event, while ours aggregates across many different benefit extensions and reductions and hence constitutes a more representative estimate.

Our findings are quite similar to those from two recent papers that have estimated the macro effect by exploiting variations in state-level UI extensions coming from measurement error in the total unemployment rate (Coglianese 2015, and Chodorow-Reich and Karabarbounis 2016). Chodorow-Reich and Karabarbounis (2016) specifically use revisions to the official unemployment rate to construct plausibly exogenous short term variation in UI durations. The methodologies and source of policy variation in these papers are quite different from our own – for example, we are able to estimate the impact of more durable changes in policies than possible using the measurement error approach. However, the very different types of variation leveraged across our two sets of papers makes them complementary. Overall the findings in all three papers suggest that the employment impact of the sizeable UI extensions during the Great Recession was likely modest. At worst, they led to a small reduction in aggregate employment, and at best they slightly boosted employment in the local economy.

Our findings suggest that the substantial insurance value of the UI extensions during the Great Recession was not offset in any meaningful way by a cost from weaker job growth.  This is a useful lesson for policymakers to keep in mind when designing optimal countercyclical policies.

References

Boone, C, A Dube, L Goodman, and E Kaplan (2016), “Unemployment Insurance Generosity and Aggregate Employment“, IZA Discussion Paper.

Chodorow-Reich, G, and L Karabarbounis (2016), “The Limited Macroeconomic Effects of Unemployment Benefit Extensions”, NBER Working Paper 22163.

Coglianese, J (2015), “Do Unemployment Insurance Extensions Reduce Employment?”, mimeo, Harvard University.

Congressional Budget Office (2012), “Unemployment Insurance in the Wake of the Recent Recession,” Technical report.

Dube, A, T W Lester, and M Reich (2010), “Minimum wage effects across state borders: Estimates using contiguous counties”, Review of Economics and Statistics, 92 (4), 945–964.

Farber, H S, and R G Valletta (2015), “Do extended unemployment benefits lengthen unemployment spells? Evidence from recent cycles in the US labor market”, Journal of Human Resources, 50 (4), 873–909.

Hagedorn, M, F Karahan, I Manovskii, and K Mitman (2015), “Unemployment Benefits and Unemployment in the Great Recession: The Role of Macro Effects”.

Hagedorn, M, I Manovskii, and K Mitman (2016), “Interpreting Recent Quasi-Experimental Evidence on the Effects of Unemployment Benefit Extensions”, NBER Working Paper 22280.

Johnston, A, and A Mas (2015), “Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut”, Unpublished manuscript, Princeton University.

Mitman, K, and S Rabinovich (2014), “Do Unemployment Benefit Extensions Explain the Emergence of Jobless Recoveries?”, Unpublished manuscript.

Rothstein, J (2011), “Unemployment insurance and job search in the Great Recession”, Brookings Papers on Economic Activity, 143–214.

Summers, L H (2010) “The Economic Case for Extending Unemployment Insurance,” The White House Blog, 14 July.

Job Loss in the Great Recession – Laurent Belsie, National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA

A Decade After the Preventable, Reckless, Incompetence-Driven GREAT Economic Meltdown, CORPUSVEC SOVEREIGN TALENTS CHANCELLERY INSTITUTES are Minded to devote a Select Leading Articles to The Billions of Unwilling Casualties by Collateral Damage, Interrogate the Unpunished Gross Incompetence of Responsible Persons/Institutions and INSPIRE Radical Critical Thinking to Cushion, if not Firewall the Impacts of Future Recessions on non-Contributory Citizens-Electors who were lampooned with dehumanizing Doctrinaire Austerity Measures while the Culprits were Rewarded with Showers of Bailouts. CORPUSVEC SOVEREIGN TALENTS continues to be alarmed about the Resistance to Constructive Fundamental Change in Establishment Attitudes to Protect Citizens against Future Recessions, the Business-As-Usual Recruitment Practices and its Implications for Sustainable Democratic Governance. Observably Obscenely, some of those whose Incompetence was so Registered in allowing the GREAT Recession have gone on to be handsomely rewarded with Life-Peerages [Careers for Life], Lucrative Private Sector Directorships and Speaking Engagement Fees whereas Citizens continue to be overburdened with Mounting Household Debt which could trigger another GREAT Recession.

 

Job Loss in the Great Recession

Mean duration of unemployment … hit a new high in the Great Recession: a seasonally adjusted 35 weeks versus about 20 weeks at the peak of each of the previous three downturns.

In Job Loss in the Great Recession: Historical Perspective from the Displaced Workers Survey, 1984-2010(NBER Working Paper No. 17040), Henry Farber notes that the extent of unemployment, the difficulty in finding a new job, and lost earnings for the unemployed were all especially high during this downturn. “It is clear that the dynamics of unemployment in the Great Recession are fundamentally different from unemployment dynamics in earlier recessions,” he writes.

For example, although unemployment rates in this most recent recession were similar to those of the severe downturn in the 1980s, the rate of job loss was much higher this time (16 percent versus less than 13 percent), according to Farber’s analysis of the Bureau of Labor Statistics’ Displaced Workers Surveys (DWS). As in the previous three recessions, less educated workers were more vulnerable to layoffs than more educated ones, but even those with college degrees have seen their vulnerability to layoffs increase over time. Their job loss rate during 2007-9, at 11 percent, was at the highest level observed since the DWS data were first collected in the early 1980s. The mean duration of unemployment also hit a new high in the Great Recession: a seasonally adjusted 35 weeks versus about 20 weeks at the peak of each of the previous three downturns.

Furthermore, fewer than half of those who lost a job during the recent recession were employed as of 2010 – a significantly lower rate of reemployment than in the recoveries from the three previous recessions. Female job losers were less likely to be employed and more likely to have left the labor force than males who lost a job. Older job losers (those 55-64 years old) used to be much more likely than younger job losers to move out of the labor force, but that gap has narrowed in recent years. The most recent downturn was so severe that no group escaped its effects. “[T]he re-employment experience of job losers is substantially worse for those who lost jobs in the Great Recession than in any earlier period in the last thirty years,” Farber writes.

Workers’ earnings also have taken a hit. Those who were reemployed after losing a job during the Great Recession, on average, earned 17.5 percent less per week than in their old jobs. That was the largest decline since 1984. Among those who lost full-time jobs, the negative impact was even greater: they were earning 21.8 percent less. One reason for that larger loss is the move of many full-time job losers to part-time work. Of those who lost a full-time job and were reemployed, about one in five held a part-time job. Even among those who lost full-time jobs and found new full-time jobs, the overall loss in weekly earnings (including earnings increases they would have earned had they kept their original jobs) was about 11 percent. However, this is not high when compared with the decline in previous recessions.

As grim as these earnings data are, the DWS data probably paint too rosy a picture overall, Farber warns. “First, time spent unemployed by those workers who are re-employed is not considered. Second, more hinges on employment, particularly full-time employment, in the U.S. than in other developed countries. Health insurance and pensions are closely linked to employment, and many workers do not have alternative access to these important benefits. This makes job loss an expensive and damaging event on average.”

–Laurent Belsie, National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA

 

THE GLOBAL ECONOMIC MELTDOWN & EMPLOYMENT TEN YEARS ON: A CRITICAL LEGACY & DYNAMICS INTO THE FUTURE – CORPUSVEC SOVEREIGN TALENTS CHANCELLERY INSTITUTES

 

EMPLOYMENT SINCE THE GREAT ECONOMIC MELTDOWN – TEN YEARS ON: A CRITICAL LEGACY & DYNAMICS INTO THE FUTURE – CORPUSVEC SOVEREIGN TALENTS CHANCELLERY INSTITUTES
======================

A Decade After the Preventable, Reckless, Incompetence-Driven GREAT Economic Meltdown, CORPUSVEC SOVEREIGN TALENTS CHANCELLERY INSTITUTES are Minded to devote a Select Leading Articles to The Billions of Unwilling Casualties by Collateral Damage, Interrogate the Unpunished Gross Incompetence of Responsible Persons/Institutions and INSPIRE Radical Critical Thinking to Cushion, if not Firewall the Impacts of Future Recessions on non-Contributory Citizens-Electors who were lampooned with dehumanizing Doctrinaire Austerity Measures while the Culprits were Rewarded with Showers of Bailouts. CORPUSVEC SOVEREIGN TALENTS continues to be alarmed about the Resistance to Constructive Fundamental Change in Establishment Attitudes to Protect Citizens against Future Recessions, the Business-As-Usual Recruitment Practices and its Implications for Sustainable Democratic Governance. Observably Obscenely, some of those whose Incompetence was so Registered in allowing the GREAT Recession have gone on to be handsomely rewarded with Life-Peerages [Careers for Life], Lucrative Private Sector Directorships and Speaking Engagement Fees whereas Citizens continue to be overburdened with Mounting Household Debt which could trigger another GREAT Recession.

 

Chart Book: The Legacy of the Great Recession

UPDATED

SEPTEMBER 12, 2017

The United States went through its longest, and by most measures worst economic recession since the Great Depression between December 2007 and June 2009. This chart book documents the course of the economy following that recession against the background of how deep a hole the recession created – and how much deeper that hole would have been without the financial stabilization and fiscal stimulus policies enacted in late 2008 and early 2009.

Part I: Recovery Began in June 2009

The Economy Began Growing in Mid-2009

Economic activity as measured by real (inflation-adjusted) gross domestic product (GDP) was contracting sharply when policymakers enacted the financial stabilization bill (TARP) and the American Recovery and Reinvestment Act. The economy began growing in 2009, and has averaged 2.2 percent annual growth since then.

Employers Have Added 189,000 Jobs a Month Since Early 2010

The pace of monthly job losses slowed dramatically soon after President Obama and Congress enacted the Recovery Act in February 2009. The trend in job growth in 2010 was obscured by the rapid ramp-up and subsequent decline in government hiring for the 2010 Census, but private employers have added 17.2 million jobs to their payrolls in the 90 months of sustained growth since February 2010, an average of 191,000 jobs a month. Total employment (private plus government) has averaged 189,000 a month over that period, as federal, state, and local government were net job losers. In August, private employers added 165,000 jobs. Federal government employment fell by 1,000, state employment fell by 5,000, and local employment fell by 3,000. The net gain in total nonfarm employment was 156,000 jobs. Total employment (private plus government) has increased every month for the past 83 months.

Part II: The Recession Put the Economy in a Deep Hole

GDP Fell Far Below What the Economy Was Capable of Producing

In the second quarter of 2017, the demand for goods and services (actual GDP) was roughly $32 billion (about 0.2 percent) less than what the economy was capable of supplying (potential GDP). This output gap, which is manifested in excess unemployment and underemployment and idle productive capacity among businesses, is the legacy of the Great Recession. Congressional Budget Office projections show the gap closing over the next few years as actual GDP grows somewhat faster than potential GDP. Each July, GDP data for the previous three years are updated to incorporate more complete and more detailed source data as well as methodological improvements. These revisions raised the level of GDP by about $50 billion going into the second quarter of this year. CBO’s estimates of potential GDP do not currently reflect these changes and could change modestly once they are taken into account.

GDP rose at a 3.0 percent annual rate in the second quarter of 2017 and was 2.2 percent higher than in the same quarter a year ago. The latter figure equals the 2.2 percent average annual growth since the start of the recovery, which has been insufficient to fully close the output gap.

In its June 2017 Update to the Budget and Economic Outlook, CBO projects that the gap between actual and potential GDP will close in 2018. CBO does not try to forecast business-cycle fluctuations, but instead assumes that real GDP growth will reflect underlying trends in the economy’s capacity to produce goods and services and that after 2020, actual GDP will be 0.5 percentage points lower than potential GDP, which is roughly the average historical gap.

Job Losses Were Unprecedented

Employers began to add jobs in 2010. Progress erasing the jobs deficit was slow for some time, but the economy has now recovered the 8.7 million jobs lost between the start of the recession in December 2007 and early 2010 and continued to add jobs since. Nonfarm payroll employment was 6.0 percent (8.3 million) higher in August 2017 than it was at the start of the recession.

Surpassing the pre-recession peak was a milestone on the way to a full jobs recovery, but population growth over the past several years means the potential labor force is larger than it was then. Job creation has averaged 175,000 a month over the past 12 months and 185,000 over the past three months. Those are well above what’s required to keep up with potential labor force growth (the pace of job creation that’s appropriate once the economy is back to full health).

The Unemployment Rate Rose to Near Its Postwar High…

The unemployment rate rose far higher than in the previous two recessions and far faster than (though not quite as high as) in the deep 1981-82 recession. Technically, the recession that began in December 2007 ended in June 2009 as the economy began growing again, but the unemployment rate did not fall to 5.0 percent, where it was at the start of the recession, until late 2015. The unemployment rate has been under 5.0 percent for the last 16 months and was 4.4 percent in August.

…And Stayed High Long After the End of the Recession

The relatively modest pace of job growth in the first years of the recovery kept the unemployment rate high long after the end of the recession. This is similar to what happened in the previous two recessions, and does not resemble the fairly rapid decline that followed the severe 1981-82 recession. While the unemployment rate is much lower now than it was early in the recovery, other indicators like those discussed below suggest there still may be some “slack” (people who are not working but want to be or people who would like to be working full time but can only find part-time jobs) in the labor market.

The Share of the Population with a Job Fell to Levels Not Seen Since the Mid-1980s

The sharp rise in the unemployment rate and discouragement over the prospects of finding a job caused a decline in the percentage of the population in the labor force (those either working or looking for work). As a result of rising unemployment and declining labor force participation, the percentage of the population with a job fell sharply in the recession and stayed low through much of the recovery. It began to move up in 2014 and 2015 as falling unemployment offset still-falling labor force participation. In August, however, the labor force participation rate was 62.9 percent, 0.1 percentage points above its average rate in 2016; the employment-to-population ratio was 60.1 percent, 0.4 percentage points above its average rate in 2016.

Long-Term Unemployment Rose to Historic Highs

Long term unemployment reached much higher levels and persisted much longer in the Great Recession and subsequent jobs slump than in any previous period in data that go back to the late 1940s. The worst previous episode was in the early 1980s, when the long-term unemployment share peaked at 26.0 percent and the long-term unemployment rate peaked at 2.6 percent. Moreover, in the earlier episode, a year after peaking at 2.6 percent, the long-term unemployment rate had dropped to 1.4 percent. It took six years from the end of the Great Recession to reach that rate, which it did in June of 2015. That rate has edged down over the past year and was 1.1 percent in August. Still, nearly a quarter (24.7 percent) of the 7.1 million people who were unemployed — 1.7 million people — had been looking for work for 27 weeks or longer.

Labor Market Slack Reached a Record High

The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — recorded its highest reading on record in November 2009 in data that go back to 1994. This rate has been 8.6 percent for the last three months, which is slightly above where it was in 2007 before the Great Recession but more than a percentage point higher than it was in 2000.

Growth in Workers Earnings Has Been Modest

Average hourly earnings of employees on private payrolls grew modestly through much of the recovery, and to date have averaged 2.2 percent annually. Inflation has been modest as well, but over much of the economic recovery, real (inflation-adjusted) wages hardly grew and have failed to keep up with increases in workers’ productivity (output produced per hour of work).

As a result, the share of national income going to profits rose relative to that going to wages. Both inflation and productivity have fluctuated more than nominal earnings during this period, but, on average, productivity has risen at roughly 1 percent per year from the end of the recession through the second quarter of 2017 and the cost of a typical worker’s market basket has risen about 1¾ percent per year over the same period—although productivity growth has been much lower recently.

The pace of wage growth quickened in 2015 and into 2016, but has subsequently slowed. In August, average hourly earnings of all employees on private payrolls were 2.5 percent higher than a year earlier (earnings of non-management employees were up 2.3 percent). Low inflation in 2015 and 2016 led to solid real wage gains, but strong nominal wage growth will be required to maintain such gains if inflation rises further.

The Number of People Looking for Work Swelled Compared with the Number of Job Openings

At one point at the beginning of the recovery there were 7 people looking for work for every job opening. That ratio has declined substantially and is now near its historic low just before the 2001 recession in data that go back to December 2000. In July 2017, 7.0 million workers were unemployed, compared with 6.2 million job openings (a ratio of 11 job seekers for every 10 job openings).

Part III: The Great Recession Would Have Been Even Worse without Financial Stabilization and Fiscal Stimulus Policies

GDP Would Have Been Lower Without the Recovery Act…

The Recovery Act was designed to boost the demand for goods and services above what it otherwise would be in order to preserve jobs in the recession and create them in the recovery. The Congressional Budget Office finds that GDP has been higher each year since 2009 than it would have been without the Recovery Act (with the largest impact in 2010 when GDP was between 0.7 and 4.1 percent higher than it otherwise would have been). The impact diminished, as expected, as the economy recovered, but CBO estimates that even at the end of 2012 GDP was between 0.1 and 0.6 percent larger than it would have been without the Recovery Act.

…And Unemployment Would Have Been Higher

The Congressional Budget Office estimated that because of the Recovery Act, the unemployment rate has been lower each year since 2009 than it otherwise would have been. The maximum effect was in 2010, but CBO estimates that even in the fourth quarter of 2012 the unemployment rate was 0.1 to 0.4 percentage points lower than it otherwise would have been and employment was between 0.1 million and 0.8 million jobs greater than it otherwise would have been.

https://www.cbpp.org/research/economy/chart-book-the-legacy-of-the-great-recession