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Economists Credit Fed For Alleviating Crisis
Economists say stimulus helped but point to central bank’s key role
By PHIL IZZO
“The $787 billion stimulus package was a good for the economy, but the Federal Reserve played the biggest role in rescuing the U.S. economy from the financial crisis, according to the majority of economists in the latest Wall Street Journal forecasting survey.

“A much worse result would have occurred if nothing had been done,” said survey participant Allen Sinai of Decision Economics, co-author of a paper examining the effects of government intervention with colleague Paul Edelstein. But “the absence of monetary policy easing [by the Fed] would have resulted in a much worse economy than the absence of the fiscal policy stimulus.”

Thirty-eight of the 54 surveyed economists, not all of whom answered every question, said the American Recovery and Reinvestment Act boosted growth and mitigated job losses, while six said the legislation had a net negative effect.

On average, economists estimated that the stimulus added one percentage point to growth in 2009; they forecast gross domestic product would expand 3% this year, compared with 2.2% in the absence of stimulus. They estimated that the February unemployment rate, reported at 9.7% last week, would have been 10.4% without the stimulus.”

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