Looking at GDP from the last several quarters of the Bush years and the first several quarters of the Obama years, one thing is obvious: the stimulus, which was signed in mid-February 2009, absolutely pulled the economy out of a very deep recession. The chart shows almost instant recovery when the stimulus money was injected into the economy.
Well, it turns out the stimulus had an even greater effect give that the downturn in economy was even deeper that originally believed.
Output in the third and fourth quarters fell by 3.7% and 8.9%, respectively, not at 0.5% and 3.8% as believed at the time. Employment was also falling much faster than estimated. Some 820,000 jobs were lost in January, rather than the 598,000 then reported. In the three months prior to the passage of stimulus, the economy cut loose 2.2m workers, not 1.8m. In January, total employment was already 1m workers below the level shown in the official data.
By the third quarter of 2009, the economy was back in positive territory again. Now imagine if these real GDP numbers had been known at the time. Perhaps the stimulus would have been twice as large. The impact would have been tremendous.