White House: stimulus money added jobs, GDP growth

A sign announces a section of road work funded by the American Recovery and Reinvestment Act U.S. economic stimulus plan in the Denver area, September 10, 2009.

WASHINGTON (Reuters) - U.S. President Barack Obama's $787 billion stimulus package created or saved about 1 million jobs in the first six months after it was enacted, the White House said in a report released on Thursday.

In its first quarterly look at the impact of the stimulus bill, also known as the American Recovery and Reinvestment Act, the Council of Economic Advisers said it had added as many as 3 percentage points to second quarter GDP growth.

"Our multifaceted analysis suggests that the ARRA has had a substantial positive impact on the growth of real gross domestic product (GDP) and on employment in the second and third quarters of 2009," the report said.

Even with the stimulus package, GDP still fell at a 1 percent annual rate in the second quarter after a steep 6.4 percent collapse in the first quarter of this year.

Countries around the world that had larger stimulus packages had fared better economically than those with smaller ones, the report also concluded.

CEA chair Christina Romer, one of Obama's top economic advisers, told reporters the package was on track to save or create 3.5 million U.S. jobs by the end of 2010.

She said the White House expected unemployment to peak around 10 percent by the beginning of next year or end of 2009. Unemployment came in at 9.7 percent in August.

Romer noted that credit was still tight and repeated the administration's view that the stimulus bill had to be given time to work before another one would be looked at.

Obama, a Democrat, and his aides have been eager to cite the stimulus package as one of the main factors in helping to steer the U.S. economy away from the brink of another Great Depression.

DOUBT AND UNCERTAINTY

Republicans are less enthusiastic about the expensive package and expressed doubt about its role in job creation.

"It is particularly disappointing to see the same White House that told Americans its trillion dollar spending plan would freeze unemployment at 8 percent ... is taking credit for creating 1 million American jobs," Senate Republican leader Mitch McConnell said in a statement.

"How can anyone tell the American people with a straight face that the more than 2 million jobs that have been lost since the stimulus was enacted is actually 1 million jobs 'saved or created?'" he said.

The report said its estimates of the package's impact should be regarded as preliminary and viewed with "considerable uncertainty."

The CEA used different models to test the impact of the bill. One estimate, based on statistical projection, showed the package added roughly 2.3 percentage points to real GDP growth in the second quarter and would likely add more in the third.

Another set of estimates, based on standard economic models, showed the package had added between 2 and 3 percentage points to baseline real GDP growth in the second quarter and some three percentage points in the third quarter.

"There is also broad agreement that it has likely added between 600,000 and 1.1 million to employment ... as of the third quarter," the report said.

The report said by the end of August, $151.4 billion from the package had been doled out or implemented as tax reductions, while $128.2 billion had been obligated -- meaning that sum was available to recipients once expenditures were made.

(Editing by Philip Barbara)