U.S. unemployment marches on as Mercatus Center finds no relationship between stimulus spending and employment

While the latest claim from the White House is that the Recovery Act has generated or saved 3.6 million jobs, recent research fails to find a connection between stimulus projects and unemployment. In the case of Louisiana, the unemployment rate is at its highest level since the recession began and continues to climb, notwithstanding the state’s $3 billion worth of Recovery Act projects.

If the White House is correct, without the Recovery Act the national rate of unemployment would be 11.9 percent. To put that in perspective, the current rate of 9.6 percent has only been higher in one recession since World War II, and at no time during that period did the published rate exceed 11 percent.

However, in her new report, “Job Creation Update,” Mercatus Center Senior Research Fellow Veronique de Rugy asserts that the promise of reduced unemployment on account of the “gigantic” Recovery Act “did not materialize.”

“To this day, $275 billion has been reported spent in grants, contracts, and loans through the stimulus bill and yet unemployment has not decreased. In fact, the latest data from the Bureau of Labor statistics shows a slight increase in the unemployment rate from 9.5 percent in July to 9.6 percent in August.”

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Fergus Hodgson is the Capitol Bureau Reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.