“We’ve got to keep up a head of steam right now, and I wonder whether we’re going to be able to keep it going,’’ said Jeffrey Simon, director of the Massachusetts Recovery and Reinvestment Office, charged with overseeing the state’s stimulus funds. “I see the positive impact it’s had on people here, so I’m a little puzzled by what’s going on in Washington.’’
Although economists debate the overall impact of the $787 billion stimulus package, most agree on two points: It acted as a buffer against the worst downturn since the Great Depression by creating much-needed jobs; at the same time, however, it has failed to lift the economy out of a malaise that appears to have deepened in recent weeks.
By some measures, the Massachusetts economy is faring better than the nation’s, buoyed in part by job growth in its large education and health care sectors.
The state’s Executive Office of Labor and Workforce Development reported last week that the state gained 12,700 jobs in July, keeping its unemployment rate at 7.6 percent - below the national rate of 9.1 percent.
But in recent weeks the outlook has worsened, with multiple 400-plus point losses in stock markets, the first-ever downgrade of the nation’s credit rating, and mounting worries about debt problems in several European countries.
Adding to those pressures are impending cutbacks at the federal level. Certain unemployment benefits and payroll tax cuts are scheduled to expire at the end of the year, and President Obama and Congress agreed after months of haggling to cut $25 billion in spending from the budget that will take effect in October.
“I think it’s a real worry. You have all these things happening at once and an expansion of the economy that is not firmly established,’’ said Jeffrey Frankel, a professor at Harvard University’s Kennedy School of Government who served as an economic adviser to President Clinton.
