Obama, anxious to reduce double-digit US unemployment which has dented his popularity, has already called for additional government measures to boost jobs on top of the $787bn stimulus package he signed in February 2009.
Christina Romer, head of Obama’s Council of Economic Advisers, said she expects positive job creation by the spring, but stressed that there was definitely a need for additional “targeted action” to aid employment.
“There is uncertainty about where the economy is going … when will the private sector come back,” Romer told reporters on a conference call to discuss a quarterly report to Congress on the stimulus package.
“Where are we going to be a year from now, do we see consumer confidence come back, do we see firms … starting to invest again,” she said.
The country suffered its worst recession in 70 years after the collapse of the US housing market set off a global financial crisis, forcing the jobless rate to 10 percent.
In response to Obama’s call for more measures, the House of Representatives in December approved another $155bn jobs package. The Senate is expected to take up its version of fresh jobs legislation shorlty.
The White House, using two different approaches to figure out the impact of the stimulus package, estimates that US employment had been raised by between one and a half and two million jobs by the end of 2009 as a result of the stimulus measures.
Romer said she thinks the stimulus measures will have saved up to 3.5 million jobs by year’s end.
In addition, the White House said 640,000 jobs had been saved or created by direct recipients of stimulus money, implying that this estimate may be on the low side.
Money pumped into the economy can have an amplified impact on hiring that goes beyond the value of its dollar amount because of so-called multipliers that gauge the ripple effect on the economy as the government pumps in money.
Roughly a third of the stimulus package has already been spent or received in the form of tax cuts. If money that has been pledged but not yet spent is included, that sum rises to over half of the total.
The White House estimates that this added between three and four percentage points to growth in the third quarter and between one and a half and three percentage points in the fourth quarter.
The US economy grew at an annualised pace of 2.2 percent in the third quarter after shrinking by 0.7 percent in the previous three months.
“Without the recovery act we would have continued to decline in the third quarter,” Romer said. She noted that private-sector analysts forecast four percent growth in the fourth quarter, and said much of this activity would also be thanks to the stimulus package.
