Where the Stimulus Went and the Economic Headwind It Faces

BY dchinni  August 11, 2010 at 3:00 PM EDT

Photo by George Joch via Flickr Argonne National LaboratoryHow much money does it take to restart a sputtering economy? That’s the question the federal government has been trying to figure out for the last year and a half.

In the past year-plus the American Reinvestment and Recovery Act has pumped hundreds of billions into the U.S. economy. Yet, the slump continues. Why? Has the stimulus had an impact? Has it made things better than they would have been without the stimulus – a frequent argument of the Obama administration?

With the help of ProPublica, a non-profit investigative news operation, Patchwork Nation has sorted through the first year of ARRA funding and found two things, both of them somewhat disconcerting.

First, when you look at how the money was disbursed using Patchwork Nation’s 12 county types, the places that need the most help have not done as well as some other communities. Second, even taking that “misplaced disbursement” into account, the money pushed into U.S. communities is significant and still sluggish economy suggests a the hole in the U.S. economy is massive.

In other words, even with the $272 billion that has been spent, according to ProPublica, the larger economic inertia seems to be a powerful force that will be hard to overcome. Would better targeting the stimulus dollars have helped? Possibly. But the barriers to significant economic improvement seem steep.

Where It’s Gone

The spending in the stimulus has been far from even up to now. Some county types have seen less that $700 per person – the socially conservative Evangelical Epicenters – while others have seen more than $1,300 per person – Mormon Outpost counties. Some differences among Patchwork Nation’s 12 county types is to be expected, even welcome if the money is targeted correctly.

(Reporter’s note: The 50 counties holding the state capitals were not included in this analysis because that money was often spread to locales across the states.)

But the way the money reached our 12 community types shows something of a haphazard distribution not aimed specifically at places in need or places that might help jump-start the broader economy.

If the goal of the stimulus was to reach places in need, it arguably may have missed its target.

Through the first-quarter of 2010, the period through which ProPublica has broken down data, five county types had unemployment rates of more than 10 percent – the wealthy Monied ‘Burbs, African-American heavy Minority Central counties, the Evangelical Epicenters, the big city Industrial Metropolis counties and the small town Service Worker Centers. Of those five county types, none received more than 1,000 per capita and only one county type, the Industrial Metropolis was in the top half of the 12 types.

Meanwhile, Tractor Country counties, which had a very low unemployment rate – less than seven percent – raked in an average of $1,282 per capita.

In short, a lot of the stimulus went to places that probably didn’t need it as much.

Looking for a Jump Start

But the stimulus was about more than alleviating economic pain. It was, in theory anyway, about stimulating the economy. Did the money go to the right places if that was the goal. Arguably, it has been a mixed bag.

If the stimulus was aimed at stimulating the economy then the Monied Burbs might have been the best target for the dollars. As we have noted before on Patchwork Nation, those 275 counties have the highest median household income and help drive the consumer economy.

Through the first quarter of this year, however, the ProPublica data show that $703 per capita were spent there, the second lowest spent in any county type in Patchwork Nation.

Other wealthy communities did better though. For instance, the relatively wealthy Boom Town counties that grew rapidly in the housing boom saw a lot more stimulus dollars, about $982 per person.

But maybe more important than the how the stimulus was spread is the sheer size of it. After all, throwing $800 billion at the slumping economy was supposed to help the country more broadly. The question is was it enough.

Patchwork Nation spent the last week in Eagle, Colo., a Boom Town, and there was little doubt the stimulus was having some kind of effect. But the construction trade there is still hurting badly and while repaving roads is helping some, many more have seen little or no work. The owner of one building crane company told us he had lost three of his five machines in the last two years and was hoping just to make it through winter.

Consider for a moment the numbers here. Even at $703 per capita, that would mean an average family of four living in a Monied Burb county had received, on average, more than $2,800 in stimulus from the ARRA in the past year. That may not be a massive boost, but it is not a tiny amount either. And still the economy limps along.

And remember those are just averages. Some places have received more, some less.

Eagle County, a Boom Town, has received only about $520 per capita in stimulus money thus far. That’s below the Boom Town average, of course. But, more to the point, many people there seem to feel the local economy has not yet bottomed out.

*Dante Chinni is the project director for Patchwork Nation*.