White House: Stimulus on pace for 3.5 million jobs

White House: Stimulus on pace for 3.5 million jobs

By CHARLES BABINGTON
Associated Press Writer


WASHINGTON (AP) -- The Obama administration is defending its claim that the $787 billion economic stimulus plan will save or create 3.5 million jobs before 2011 even while conceding that unemployment will likely continue to rise beyond its earlier predictions.

A report Monday by the White House Council of Economic Advisers said the projections were based on conservative estimates and widely accepted assumptions. The 3.5 million job estimate remains valid, the report said, now that stimulus money is starting to pay for various projects throughout the nation.

The assessment was the same as what Obama's economists forecast in January, when they predicted that the economic stimulus would prevent unemployment from rising above 8 percent. But unemployment reached 8.9 percent in April and the chairwoman of the Council of Economic Advisers, Christina Romer, said over the weekend that current predictions that unemployment would reach 9.5 percent were "pretty realistic."

In an interview that aired Sunday on C-SPAN, Romer said that given the worsening economy, the unemployment rate without a stimulus would have been higher than initially believed.

"Our forecast was made back in January and one of the things that happened is a lot of deterioration both in our economy and the world economy in January and February," she said. "If you look at a lot of the private forecasts, they became a lot more pessimistic as the first quarter went on."

The report says the analysis is based on what the CEA considers "the relatively conservative rule of thumb that a 1 percent increase in GDP corresponds to an increase in employment of approximately 1 million jobs."

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