Stimulus boosted U.S. GDP by up to 4.5 percent in 2Q 2010
WASHINGTON (Reuters) - The massive stimulus package boosted real GDP by up to 4.5 percent in the second quarter of 2010 and put up to 3.3 million people to work, the nonpartisan Congressional Budget Office said on Tuesday.
CBO's latest estimate indicates that the stimulus effort, which remains a political hot potato ahead of the November congressional elections, may have prevented the sluggish U.S. economy from contracting between April and June.
Economists surveyed by Reuters expect that revised numbers due out on Friday will show that the economy grew at an anemic 1.4 percent pace during that time period -- less than the boost of at least 1.7 percent that the stimulus provided, according the CBO estimate.
The massive package of tax cuts, construction spending and enhanced safety-net benefits was passed in February 2009 in the midst of the deepest recession since the 1930s.
It raised employment by between 1.4 million and 3.3 million jobs during the second quarter of this year, CBO estimated.
Measured another way, CBO said the stimulus increased the number of full-time equivalent jobs by up to 4.8 million, as part-time workers shifted to full-time work or employers offered more overtime work.
CBO said the package, officially known as the American Recovery and Reinvestment Act, would cost $814 billion, down from its previous estimate of $862 billion. The lower figure was thanks largely to health-care subsidies that cost less than anticipated. CBO initially estimated the bill would worsen budget deficits by $787 billion.
Other than that, the estimate varies only slightly from the budget office's forecast released in May.
With both the House of Representatives and the Senate up for grabs in November, Democrats hope voters will give them credit for breathing some life into the economy. Republicans, who almost universally opposed the stimulus, have criticized it as wasteful and ineffective.
Some 67 percent of those surveyed in a Reuters/Ipsos poll last month said President Barack Obama is not focusing enough on job creation. Voters in that survey said the economy and jobs are the most pressing issues facing the country.
CBO said it expects the effects of the stimulus to gradually diminish over the remainder of the year.
(Reporting by Andy Sullivan and Emily Kaiser; Editing by Stacey Joyce)
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