Back in January when Team Obama was pushing its stimulus plan, the White House put out a self-analysis of the potential economic impact of the plan, authored by Jared Bernstein and Christina Romer. If Congress passed the president’s plan, the report said, the U.S. unemployment rate would rise to just under 8 percent by later this year and fall to 7 percent by Q4 2010. If the plan was not passed, the reported predicted, the U.S. unemployment rate would climb to 9 percent next year.
Time for a reality check. Unemployment is already at 8.9 percent The consenus private sector estimate is that unemployment will average 9.7 percent next year. Douglas Elmendorf, head of the Congressional Budget Office, says unemployment will peak at 10.5 percent next year. One conclusion is that we need another mega-stimulus package. An alternatve conclusion would be that the first one isn’t working and it’s time for Plan B.