Here are several early reactions to U.S. President Barrack Obama’s $447-billion (U.S.) jobs bill.
Toronto-Dominion Bank: “If the bill is signed into law in its current form, it could raise our economic growth forecast by around 0.8 percentage points in 2012 and add around 800,000 jobs to U.S. payrolls.”
Menzie Chinn, Econbrowser: “The President’s proposal will probably not have an enormous impact on GDP (in principle, it should have been larger, but I bow to political realities), although the estimates vary since the details are still coming out. What perhaps is of key importance is that these measures prevent the economy from falling below stall speed.”
BMO Nesbitt Burns: “Still, if the tax cut proposals are passed in Congress, and if at least half end up spurring demand, the plan would provide a decent boost to 2012 GDP growth. Instead of growing a modest 2.5 per cent, as we currently anticipate, the economy could grow 3.25 per cent, putting a more meaningful dent in the unemployment rate, which we believe will fall from 9.1 per cent currently to 8.5 per cent by the end of next year, in the absence of stimulus. Importantly, the tax cuts would meaningfully reduce recession odds, which are currently pegged at roughly one-in-three.”
Goldman Sachs: “It is not yet clear how congressional Republicans will respond to the proposal, and we are not changing any of our estimates at this time.”
CIBC World Markets: “After deducting the elements that were already in place and are merely being continued, this plan might end up providing additional economic momentum of 1 per cent of GDP (some of which might dribble into 2013 due to lags in getting infrastructure funds spent). If approved, we would likely boost our existing outlook for US 2012 growth, but that’s a big IF at this point.”
Paul Krugman, The New York Times: “The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1-trillion per year hole in the U.S. economy, and this plan – which wouldn’t deliver all its benefits in the first year – would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending. Still, the plan would be a lot better than nothing, and some of its measures, which are specifically aimed at providing incentives for hiring, might produce relatively a large employment bang for the buck. As I said, it’s much bolder and better than I expected.”
The stock market: Dow Jones industrial average down 234 points or 2.1 per cent.
