Obama's Economic Stimulus Program Created Up to 3.3 Million Jobs, CBO Says

President Barack Obama’s stimulus package may have created or saved as many as 3.3 million jobs last quarter and lowered the unemployment rate by as much as 1.8 percentage points, the Congressional Budget Office said.

The $814 billion program, known as the American Recovery and Reinvestment Act, or ARRA, probably added between 1.7 percent and 4.5 percent to gross domestic product for the three months through June, the nonpartisan agency said in a report issued yesterday.

“The effects of ARRA on output are expected to gradually diminish during the second half of 2010 and beyond,” the agency said. “The effects of ARRA on employment and unemployment are expected to lag slightly behind the effects on output. They are expected to wane gradually in 2011 and beyond.”

Companies in the U.S. added workers in July at a pace that suggests the economy will be slow in recouping the 8.4 million jobs lost since the recession began in December 2007, keeping consumer spending from accelerating. Growth slowed last quarter and Federal Reserve Chairman Ben S. Bernanke has described the outlook as “unusually uncertain.”

The Commerce Department’s update of U.S. GDP on Aug. 27 may show the economy grew at a 1.4 percent pace from April through June, the weakest quarter of the recovery that began in the middle of last year, compared with the 2.4 percent rate calculated last month.

The CBO projected the cost of the stimulus at $787 billion in February 2009 before Congress voted on the measure. It raised its estimate to $862 billion in January before lowering it to $814 billion this month.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net