ARRA: More Stagnation than Stimulation

Nearly $800 billion and two years later, state government analysts are revealing the true impotence of the American Recovery and Reinvestment Act (ARRA); aka the federal stimulus bill. Recent data produced by North Carolina’s Fiscal Research Division shows that the federal stimulus in North Carolina has failed to live up to its name in terms of private sector job growth throughout the duration of the recession.

Moreover, even in total employment, which factors in both private and public sector growth, the stimulus has not produced any significant growth trends since its inception.

While the stimulus went into effect on February 17, 2009, total employment continued to plummet throughout the Spring of 2009, finally bottoming out in May of that year and remaining stagnant ever since.  The only pulse in an otherwise flat-lining economic trend came in early 2010 as a temporary explosion of Census spending gave an artificial boost to government employment before dissolving again in September.

The stimulus’s accountability website,, reports that North Carolina received substantial sums of money as a result of ARRA, including: $6.5 billion in grants, $452 million in contracts, and $390 million in loans, reaching 5,807 different recipients of stimulus funds across the state. However, the immaterial influence on job growth and massive indebtedness incurred to finance this bill indicate that this program missed its mark.  This fiscal fiasco may even bring into question the entire body of Keynesian thought, which serves as the ARRA’s conceptual roots.

The most obvious failure of the stimulus, as stated previously, is the glaring absence of new jobs in the area where it really matters: the private sector. Moreover, even lavish investments in bureaucratic jobs failed to produce any significant affects on the trends in total employment over the almost two years since ARRA was enacted. Unemployment in North Carolina still soars at a troubling 9.9 percent, slightly higher than the national average of 9.8 percent. 

What the stimulus did accomplish, according to North Carolina’s recovery website, was to pay greater sums of Medicaid as well as dumping money into a vast variety of programs such as Unemployment Insurance ($660 million), Social Security ($412 million), food stamps ($173 million), child care services ($56 million), and public housing ($84 million). It remains dubious how it was determined that saturating these welfare programs could result in creating new jobs. The stimulus even gave $344,000 for the promotion of the arts.

After an incredible infusion of money into the economy, including a particular emphasis on welfare programs, North Carolinians are still waiting for that economic stimulation.

NC Total Employment (in thousands)

Total NC Private Employment (in thousands)

Total Private Employment

This article was posted in Economy by Andrew Henson on December 20, 2010 at 2:44 PM.

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