12.31.2009 0

Too Hot Not To Note: Unemployment unchanged by projects

  • On: 01/13/2010 09:35:56
  • In: Economy

  • ALG Editor’s Note: In the following featured article, the Associated Press points out that new road projects and other stimulus spending has not decreases unemployment. This proving once again that Keynesian spending fails to generate economic growth.

    STIMULUS WATCH: Unemployment unchanged by projects

    By MATT APUZZO and BRETT J. BLACKLEDGE, Associated Press WritersMon Jan 11, 4:11 pm ET

    WASHINGTON – A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

    An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

    With the nation’s unemployment rate at 10 percent and expected to rise, Obama wants a second stimulus bill from Congress including billions of additional dollars for roads and bridges — projects the president says are “at the heart of our effort to accelerate job growth.”

    Transportation Secretary Ray LaHood defended the administration’s recovery program Monday, writing on his blog that “DOT-administered stimulus spending is the only thing propping up the transportation construction industry.”

    Road spending would total nearly $28 billion of the Jobs for Main Street Act, a $75 billion second stimulus to help lower the unemployment rate and improve the dismal job market for construction workers. The Senate is expected to consider the House-approved bill this month.

    But AP’s analysis, which was reviewed by independent economists at five universities, showed the strategy of pumping transportation money into counties hasn’t affected local unemployment rates so far.

    “There seems to me to be very little evidence that it’s making a difference,” said Todd Steen, an economics professor at Hope College in Michigan who reviewed the AP analysis.

    And there’s concern about relying on transportation spending a second time.

    “My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who also reviewed AP’s analysis.

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