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By Robert Farley February 11, 2010

Boehner says unemployment will stay at 10 percent this year

Soon after the White House released the "Economic Report of the President" on Feb. 11, 2010, Republicans derided its boast that the massive economic stimulus championed by President Barack Obama may in time be viewed as "one of the great triumphs of timely, effective countercyclical macroeconomic policy."

"Washington Democrats still don’t get it," House Republican Leader John Boehner wrote in a press release. "Two days after the president brushed off Republicans' concerns that Democrats' job-killing policies are causing great uncertainty for small businesses, the White House is now declaring in a new report that the trillion-dollar 'stimulus' will be one of history’s 'great triumphs.' The very same report, however, notes that unemployment will average 10 percent for the rest of the year. The Obama administration promised the trillion-dollar 'stimulus' would create jobs 'immediately' and keep joblessness below 8 percent."

The report does, in fact, project that the unemployment rate will hover at about 10 percent through this year. With many press accounts of the economic report highlighting the forecast that job gains for 2010 will average 95,000 a month, those two facts may seem at odds. They are not.

"A certain number of jobs need to be created every month simply to hold the unemployment rate stable," said Gary Burtless, senior fellow in economic studies at the Brookings Institution. "That's because the working-age population is growing."

In addition, as the job market improves -- or is even perceived as improving -- some people who had given up on looking for work may get back in the game and be added to the unemployed ranks. So there would have to be about 100,000 jobs added a month just for the unemployment rate to tread water.

Even still, the report says, there's evidence the labor market is stabilizing.

That's because the economy shed 691,000 jobs in the first quarter of 2009, 428,000 in the second quarter, 199,000 in the third, and 69,000 in the fourth. So to have the number of jobs increasing even moderately is an improvement.

But Boehner's statement includes an assumption masquerading as a fact: It's that the stimulus has failed if unemployment rates remain at 10 percent through the year.

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While Boehner and other Republicans have long cited rising unemployment as proof that the stimulus hasn't created jobs, many reputable and independent economists say it has, and that the unemployment rate would be even worse without it. The "Economic Report of the President" estimates the stimulus has already saved or created 1.5 million to 2 million jobs, and is on track to save 3.5 million by the end of this year. We gave President Obama a Half True when he claimed in his State of the Union address that the stimulus has already saved or created 2 million jobs, because that was on the high side of projections from his Council of Economic Advisers, the independent Congressional Budget Office and several other reputable economic forecasters. But we should note all of those forecasters put the number north of 1 million jobs.

In other words, just because the unemployment rate may stay at a whopping 10 percent, "doesn't mean that the stimulus didn't prevent an even worse catastrophe," Burtless said.

As for the last bit of Boehner's statement, we gave a Barely True to House Republican Whip Eric Cantor and other Republicans who have continued to claim that Obama promised the stimulus would keep unemployment rates below 8 percent. That was a forecast based on where the unemployment rate was expected to go without a stimulus. That forecast was in line with other independent forecasts at the time, but proved overly optimistic, as Christina Romer, chair of the White House Council of Economic Advisers, acknowledged again in a press conference on Feb. 11, 2010.

So Boehner is correct that the president's economic report forecasts the unemployment rate will remain at 10 percent through this year (even as jobs are added). But again, when Boehner cites that statistic as proof that the stimulus is having no immediate effect on jobless rates as promised, it ignores the possibility that if not for the stimulus the unemployment rate might be even worse. Many economic forecasters believe that's exactly the case. Still, projections about the number of jobs saved or created by the stimulus are just that, projections. And many economists believe it is still way too early to measure its effectiveness. But we think it's misleading to simply point to a stagnant unemployment rate as proof that the stimulus isn't working. And so we rate Boehner's statement Mostly True.

Our Sources

White House Web site, Economic Report of the President, Feb. 11, 2010

Rep. John Boehner's Web site, "Tone Deaf: Dems Brush Off Uncertainty Caused By Job-Killing Policies," Feb. 11, 2010

The Hill, "White House predicts unemployment rate to average 10 percent in 2010," by Walter Alarkon, Feb. 11, 2010

McClatchy Newspapers, "White House predicts weak job growth for rest of year," by Kevin G. Hall, Feb. 11, 2010

PolitiFact, "Cantor and other Republicans say Obama promised stimulus would keep unemployment rates below 8 percent," by Robert Farley, July 9, 2010

PolitiFact, "Obama claims 2 million more Americans would be unemployed if not for stimulus," by Robert Farley, Jan. 27, 2010

White House Web site, Council of Economic Advisers, Quarterly Report: The Economic Impact of the American Recovery and Reinvestment Act of 2009, Jan. 13, 2010

Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 to 2020, January 2010

Congressional Budget Office, Report: Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009 , November, 2009

Government Accountability Office, Report: Recovery Act, Recipient Reported Jobs Data Provide Some Insight into Use of Recovery Act Funding, but Data Quality and Reporting Issues Need Attention, November, 2009

CNN, "2 million jobs from stimulus - White House," by Tami Luhby, Jan. 13, 2010

Heritage Foundation, "Why Government Spending Does Not Stimulate Economic Growth: Answering the Critics," by Brian M. Riedl, Jan. 5, 2010

Heritage Foundation,"White House Report Claims Stimulus Success-Despite 3.5 Million Job Losses," by Brian M. Riedl, Jan. 14, 2010

Heritage Foundation, "CBO Says Stimulus Is Working Because We Predicted It Would," by Brian Riedl, Dec. 1, 2009

Moody's Economy.com, "How We Know the Stimulus Is Working," by Augustine Faucher, Dec. 4, 2009

Moody's Economy.com, Written Testimony of Mark Zandi Chief Economist and Cofounder of Moody’s Economy.com Before the Joint Economic Committee, The Impact of the Recovery Act on Economic Growth, Oct. 29, 2009

Interview with Gary Burtless, senior fellow in economic studies at the Brookings Institution, Feb. 11, 2010

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