Responding to a NABE survey anticipating improvements in employment, Steve Moore of the Wall Street Journal said on Fox News that the tax cut extension was a major factor in the recovery and that the stimulus had a "negative" effect. But the NABE survey itself found that most respondents do not think the tax cut extension will spur hiring, and independent economists have said the stimulus boosted GDP and employment.
Moore Responds To NABE Survey By Crediting Tax Cut Extension
Moore Points To "Tax Cut Extension" When Asked Why Companies Are Hiring. During the January 24 edition of Fox News' Happening Now, host Jenna Lee reported on a National Association for Business Economics (NABE) survey finding that "more companies are ready to begin hiring again." When asked by Lee why companies feel like they can start hiring, Moore said "one of the real trigger points for the turnaround in the economy was when President Obama finally signed that tax cut extension":
JENNA LEE (host): Well let's talk a little bit about the economy now. A new report suggesting job seekers may have some reason for hope and that would really be good for all of us. The National Association for Business Economics suggesting more companies are ready to begin hiring again and at least that question of why now and what's really driving this optimism. Is it something we can really hang on to? Stephen Moore is senior economic writer for the Wall Street Journal. So Stephen, are you as optimistic as this survey suggests?
MOORE: Yeah, Jenna. Isn't it wonderful to finally have some good news on the economy?
SCOTT: We'll take it.
MOORE: It seems like it's been about three years since we've been able to say anything really very favorable, but the report indicates what a lot of other signs are suggesting, which is for the first time in about two and a half years employers are starting to put out signs that they need new workers -- which is a very good piece of news, especially in areas like retail. Banks are starting to make loans again to small businesses, which means that they can start expanding. You know, it's amazing, Jenna, but even manufacturers are hiring again and that's -- it's been an even longer time since that's happened. So I'm optimistic. I think 2011 is looking like a really pretty, pretty positive year.
SCOTT: What's driving that? What would be driving the demand or that optimism to go ahead and hey, hire someone and get them on your payroll?
MOORE: Well first of all, there's just the natural economic cycle. You know, this has been one of the deepest recessions that we've had in decades. And so you just naturally expect employment to start picking up after you've seen such a massive decline in 14 and a half million people unemployed. Look -- I think one of the real trigger points for the turnaround in the economy was when President Obama finally signed that tax cut extension. I think it both had a real effect but also kind of just a psychological effect that Washington was going to stop this kind of assault against business. It's interesting isn't it, by the way, that the expansion is really starting after all that stimulus money was spent. So I don't think the stimulus really had much effect at all; in fact, I'd say it was probably a negative. [Fox News' Happening Now, 1/24/11]
Lee: Tax Cuts "Might Have Played In" Since Survey Was Taken After The Deal Was Reached. Responding to Moore's answer, Fox News host Jenna Lee stated, "Just wanted to mention that the survey that we're talking about was taken just after the tax cut compromise was reached. So, to your point, that might have played in." [Fox News' Happening Now, 1/24/11]
NABE Survey Found Majority Do Not Think Tax Cut Extension Will Spur Hiring
NABE Survey: 60% "Do Not Anticipate Any Increase" In Employment "In Response To New Tax Policies." During the segment, Fox reported that 42 percent of respondents in the NABE survey said they will be adding jobs. The January 24 survey of 84 NABE members also found that while respondents said the tax package will improve their sales, most "do not anticipate any increase or decrease" in employment due to the tax deal. From the report:
As for the expected impacts of the proposed 2011 tax package, more than half (53%) of the panelists, especially those from the goods-producing sector, anticipate a favorable impact on their firm's sales. In contrast, a majority of the respondents (60%) said they do not anticipate any increase or decrease in investment spending or employment in response to new tax policies. [NABE, 1/24/11]
Independent Economists: Stimulus Has Raised GDP And Increased Employment
Moore Claimed Stimulus "Was Probably A Negative" On The Economy. During the Fox News segment, Moore stated, "It's interesting isn't it, by the way, that the expansion is really starting after all that stimulus money was spent. So I don't think the stimulus really had much effect at all; in fact, I'd say it was probably a negative." [Fox News' Happening Now, 1/24/11]
CBO: Unemployment Would Be Up To 2 Percentage Points Higher Without The Stimulus. A November 2010 report by the nonpartisan Congressional Budget Office estimated that as of the third quarter of 2010, the stimulus lowered the unemployment rate "by between 0.8 percentage points and 2.0 percentage points," compared to what would have happened in the absence of the stimulus. From the report:
CBO estimates that ARRA's policies had the following effects in the third quarter of calendar year 2010:
- They raised real (inflation-adjusted) gross domestic product (GDP) by between 1.4 and 4.1 percent,
- Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points,
- Increased the number of people employed by between 1.4 million and 3.6 million, and
- Increased the number of full-time-equivalent jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise (see Table 1). (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers). [Congressional Budget Office, 11/2010]
Private Analysts Estimate That Stimulus Increased GDP By 2.1 To 3.5 Percent. In its fifth quarterly report on the American Recovery and Reinvestment Act of 2009 (ARRA), the Council of Economic Advisers (CEA) estimated that the stimulus "has raised the level of GDP as of the third quarter of 2010, relative to what it otherwise would have been, by 2.7 percent." CEA also provided a chart showing that private analysts estimate that the stimulus boosted GDP between 2.1 and 3.5 percent:
[Council of Economic Advisors, 11/18/10]
Private Analysts Estimate That Stimulus Increased Employment By 2.1 To 2.5 Million. In its report, the CEA provided the the following chart showing that private forecasters estimate that as of the third quarter of 2010, the stimulus increased employment between 2.1 and 2.5 million:
[Council of Economic Advisors, 11/18/10]
WSJ: Economists Said Economic Recovery Has Been Driven By Stimulus. The Wall Street Journal reported on January 14:
Economists surveyed by The Wall Street Journal are increasingly optimistic about the pace of the recovery, predicting the U.S. will grow at better than a 3.2% annual rate in each quarter this year.
"The U.S. economy appears to have successfully navigated the adjustment from a recovery driven primarily from economic stimulus and inventory rebuilding to one driven by private domestic demand and rising exports," said economists at Wells Fargo & Co. "Three percent growth looks pretty good, particularly with housing stuck in low gear." [Wall Street Journal, 1/14/11]