NCPA - National Center for Policy Analysis

Economic Effects of Stimulus Package

October 17, 2001

The economic stimulus package passed by the House Ways and Means Committee would have positive effects on economic growth, says an analysis by the Center for Data Analysis at Heritage, using DRI-WEFA econometric analysis.

According to the report released by House Majority Leader Dick Armey (R-Texas) yesterday afternoon:

  • Enactment of the Ways and Means economic stimulus package would create 220,000 jobs by 2004 and would effectively shave about 0.2 percentage points off the national unemployment rate each year for the next three years.
  • The analysis also shows that the employment benefits would be achieved without any increase in inflation.
  • In addition, DRI-WEFA project that an average American family of four would see their disposable income increase by $940 annually in inflation-adjusted dollars, once the plan is implemented.

With no action on a stimulus package, DRI-WEFA projects an unemployment rate headed to 5.7 percent by the end of fiscal 2002. However, if the Ways and Means plan is enacted, the annual unemployment rate would be only 5.6 percent at the end of FY 2002, then decline to 5.3 percent at the end of fiscal 2003 and drop to 5.0 percent in fiscal 2004.

Source: "Armey Releases Analysis Touting Benefits Of House Stimulus Plan," White House Bulletin, October 16, 2001.


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