NEW YORK (CNNMoney.com) - The economic stimulus program has boosted employment by 1.5 million to 2 million jobs, the president's chief economic adviser said Wednesday.
The Obama administration estimate includes both jobs directly funded by stimulus money, as well as those created indirectly by companies buying supplies for stimulus projects, people spending their stimulus tax cuts and the like.
The report, by the Council of Economic Advisers, is likely to spark sharp reactions from the Obama administration's critics who argue that the $787 billion package has failed to deliver on its promises.
To be sure, the economy has continued to lose jobs despite stimulus – shedding 85,000 in December. The administration, however, maintains that things would have been much worse without the American Recovery and Reinvestment Act.
The stimulus act also added between 1.5 and 3 percentage points to the nation's gross domestic product in the last three months of 2009, the council said in its second quarterly stimulus report to Congress.
This is a slower pace than in the third quarter, for which the council estimates stimulus added between 3 and 4 percentage points. The economy grew at a 2.2% rate in the third quarter, according to the Commerce Department. The official fourth-quarter GDP report is set to be released later this month.
"Fiscal stimulus has the biggest impact on growth rates when it's first ramping up," said Christina Romer, chairwoman of the council.
The economy likely grew at a 3% rate in the fourth quarter, according to a National Association of Business Economists forecast. The stimulus program, however, should continue to keep the level of the economy elevated throughout the year as the federal government continues to release the funds, Romer said.
Some one-third of stimulus funds, or $263.3 billion, has been paid to states, contractors and other recipients or has been distributed in tax breaks. Taking into account the amount approved for distribution but not yet handed out to recipients, the percentage rises to one-half.
The Romer report comes as the administration pushes a second stimulus bill in hopes of boosting employment. The Jobs for Main Street legislation calls for spending $154 billion on highway and transit construction and also on education, to prevent states from laying off teachers. The bill would extend the deadline to file for unemployment insurance and the Cobra health insurance subsidy until the end of June.
The nation needs such "targeted action" at this point to jumpstart private sector hiring, which is crucial for an economic recovery, Romer said.
At the same time, Republicans have become increasingly vocal that the Recovery Act is a failure. Pointing to the stubbornly high 10% unemployment rate, the GOP says the stimulus package has done little to boost the economy.
"This latest 'stimulus' report is a lot more fiction than fact," said Ohio Rep. John Boehner, the House Republican Leader. "The Administration has no idea how many jobs have been 'saved or created,' but we do know that roughly three million Americans have lost their jobs since the 'stimulus' was enacted."
Romer, in a conference call with journalists, said the council did not look at what the unemployment rate would have been without the Recovery Act.
She also pointed to private-sector economic analyses estimating that stimulus added between 1 million and 1.6 million jobs and between 1.5 and 3.1 percentage points of GDP growth in the fourth quarter. The Congressional Budget Office attributes between 800,000 to 2.4 million jobs and 1.2 to 3.1 percentage points of economic growth to stimulus.
"That a wide range of private and government analysts concur with our estimates adds a reassuring check on our analysis," she wrote in the report.
Measuring stimulus' impact is far from an exact science, said Anne Mathias, head of research for Concept Capital's Washington Research Group.
"It's impossible to say with any real accuracy whether stimulus is a success, how many jobs it created and how many jobs it prevented from disappearing," she said. You can only make estimates."
The report also highlighted the Recovery Act's impact on clean energy programs. So far, some $5 billion has been spent on or received as tax cuts for clean energy investments, with another $26 billion approved. These measures have created 52,000 direct jobs, with another 11,000 indirect positions.
Romer's job estimates are based on mathematical models that attempt to calculate the economic impact of federal spending and tax cuts. The government is also collecting reports from many funding recipients that attempt to chronicle how many actual jobs have been funded.
The second such summary of how many jobs were directly funded by stimulus spending is due to be released in the next few weeks. The initial report, put out in October, showed that recipients created or saved 640,000 jobs in the third quarter.
The administration last month changed the methodology used to track stimulus jobs to cover all positions funded by stimulus money, not just those "created" or "saved." It will also only report figures on a quarterly basis and not attempt to keep a running total.