The Council of Economic Advisers says so.

The reason that the Council has about as much credibility as Baghdad Bob is that chart that everyone has seen showing that unemployment with the stimulus is higher than what they predicted without the stimulus. Their response is to come up with a new prediction model.

We estimate a vector autoregression (or VAR) using the logarithms of real GDP (in billions of chained 2005 dollars) and employment (in thousands, in the final month of the quarter) over the period 1990:Q1-2007:Q4. We include four lags of each variable. Because the estimation ends in 2007:Q4, the coefficient estimates used in the prediction are not influenced by developments in the current recession. Rather, they show the usual joint short-run dynamics of the two series over an extended sample. We then forecast GDP and employment beginning in the second quarter of 2009 using actual data through the first quarter of 2009.

This model predicts that by now employment should be even lower than what it is. In retrospect, I will bet that the Council wishes it had used this model two years ago. I wonder if they will make any use of the model for prediction purposes going forward. Or, now that it has served its purpose, will they stick the model in a shelf in the back room.

Another takeaway I get from the report is that “shovel-ready projects” were the last component of the stimulus to kick in. Everything else is pretty much spent by now, but most of the “public investment” spending is ahead of us.