* CBO says stimulus boosted economy by up to 3.5 pct
* It lowered jobless rate by up to 2.1 pct (Adds detail, background)
WASHINGTON, Feb 23 (Reuters) - The massive stimulus package passed last year to blunt the impact of the worst U.S. recession in 70 years created up to 2.1 million jobs in the last three months of 2009, the non-partisan Congressional Budget Office said on Tuesday.
The package boosted the economy by up to 3.5 percent and lowered the unemployment rate by up to 2.1 percent during that period, CBO said.
The report comes as President Barack Obama and his fellow Democrats are pushing further measures to bring down the 9.7 percent unemployment rate before the November congressional elections.
The $787 billion price tag of the package, officially called the American Recovery and Reinvestment Act, has prompted a growing backlash from voters worried about record budget deficits. Republicans have labeled the package a failure, though economists on the left and right say it helped ward off a depression.
CBO’s new report closely resembles its initial estimates from March 2009, shortly after Obama signed the bill into law.
Though the economy performed more poorly than predicted, that was not due to the ineffectiveness of the stimulus package, CBO said.
“In CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects” of the stimulus, the research office said.
The package is likely to have the greatest impact this year, according to CBO. It is expected to boost GDP by between 1.4 percent and 4 percent and bring down the unemployment rate by between 0.7 percent and 1.8 percent in 2010, higher figures than last year when many of its programs were being set up. The impact is expected to trail off over the next two years.
Direct purchasing of goods and services by the federal government and states have been the most effective provision of the act, CBO said. Among the least effective: a tax credit for first-time homebuyers and a tax cut for the wealthy.
Since the start of the recession in December 2007, 8.4 million jobs have been lost. Though the economy started growing again last year, CBO chief Doug Elmendorf said at a congressional hearing that any recovery was likely to be slow.
Reporting by Andy Sullivan, editing by Eric Beech