White House defends jobs estimate

WASHINGTON - The Obama administration yesterday defended its assertion that the adopted $787 billion economic-stimulus plan will save or create 3.5 million jobs before 2011, a figure questioned by some economists and GOP lawmakers.

A report by the White House Council of Economic Advisers said the analysis had been based on "the relatively conservative rule of thumb that a 1 percent increase in GDP corresponds to an increase in employment of approximately one million jobs." GDP is the gross domestic product, the broadest measure of economic activity. It has declined for three straight quarters.

The report noted, however, that every increase in the GDP did not translate into new jobs. Existing workers absorb some of the increased economic activity by working longer hours and being more productive, it acknowledged.

The Labor Department reported last week that the economy lost 539,000 jobs in April. That was the 16th straight month of job losses, which now total 5.7 million.

Since the stimulus measure was enacted in February, about 1.24 million jobs have been lost, and the jobless rate has jumped to 8.9 percent, the highest since September 1983.

Employment figures typically are a lagging indicator, meaning that even after the economy starts growing, the jobless rate can keep rising for a time.

Many economists say it is difficult to calculate how many jobs are "saved" by a spending package designed to pump up the economy.

Republican officials have called President Obama's 3.5 million projection an optimistic effort to quantify something that is extremely difficult to quantify.

Yesterday's report was seen in part as an effort to answer such criticism.

The report said job creation that could be attributed to the stimulus package "rises over 2009 and 2010, as the stimulus increases, and then falls as the fiscal stimulus is withdrawn."

In August, Obama's economists will give Congress a report that offers the specific employment effects of the stimulus bill.