ABSOLUTE IMPACT of ARRA 2009

The Economic Impact of the American Recovery and Reinvestment Act of 2009

What is the the American Recovery & Reinvestment Act (ARRA) ? Should we investors pay attention to it ? Yes Of course, the Federal Government always play an important part in any economy recovery stage. Such The Act of Congress was based largely on proposals made by President Barack Obama and was intended to provide a stimulus to the U.S. economy in the wake of the economic downturn; creating a job that will put Americans back to work and get U.S. economy back on track ASAP. The measures are nominally worth $787 billion.

The Act includes federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector. You can see from a balloon diagram below.

The Act specifies that 37% of the package is to be devoted to tax cuts equaling $288 billion and $144 billion or 18% is allocated to state and local fiscal relief (more than 90% of the state aid is going to Medicaid and education). 45% or $357 billion is allocated to federal social programs and federal spending programs.

Recently, The Council of Economic Advisers has released a report on the economic impact of the stimulus package. The estimates, which have a lot of uncertainty attached to them, are that the recovery package "added roughly 2.3 percentage points to real GDP growth in the second quarter and is likely to add even more to growth in the third quarter"