President’s Day, February 17th, 2014, marked the fifth anniversary of the American Recovery and Reinvestment Act (ARRA). The economy has achieved prerecession levels in several important broad measures, including real gross domestic product (GDP), real consumer spending, real personal income, real consumer credit and net exports. Payroll employment continues its painfully slow pace towards pre-recession levels. However, there are many underlying indicators that prove worrisome in the aftermath of the Great Recession and mount further concern of the persisting “Growth Gap.” The current data suggest that stimulus was not very effective.

The attached analysis by the Republican staff of the Joint Economic Committee reviews the performance of the ARRA over the past five years. The analysis concludes that though some individual programs may have achieved the Keynesian standard of being timely, temporary and targeted, over the past five years, ARRA as a whole has failed to meet the standards set in place by the Obama Administration. While it is not possible to have known the outcome in absence of ARRA, it is plain to see that many of the programs implemented were costly without much “bang for the buck.”

What remains is a substantial increase in federal debt and a weak economy, neither of which appear to have a resolution on the horizon. The CBO has expressed increasing concern for a fiscal crisis, which when paired with a recent report noting that lower labor force participation will slow economic growth, could have dire consequences sooner than anticipated. Until policymakers can unite on real reforms, increasing invasive regulatory action, a cumbersome tax code and federal spending as a percent of GDP will all but ensure a “new normal” of slow growth.

See the full study attached in pdf format below: