Hi, I'm Michael Linden. I'm the Director for Tax and Budget Policy here at the Center for American Progress.

On February 17, 2009, Congress passed and the president signed the American Recovery and Reinvestment Act. It's better known as the stimulus. Now, at the time, everyone agreed that the economy was in serious trouble. The stimulus was designed to stop the bleeding and turn things around by pumping in billions of dollars into the economy through things like infrastructure spending, aid to the states, and tax breaks.

Three years later, it's fair to ask: Did the stimulus work? To answer that question, over the next few minutes we're going to look at three broad but important indicators for the American economy. We're going to look at each of these indicators in three time periods: before the recession began, during the recession, and after the stimulus started.

First, let's look at overall gross domestic product—that's the total measure of all economic activity in the United States.

Here's our GDP in 2006 and 2007, leading up to the start of the Great Recession. As you can see, it's growing at a respectable pace. Now let's look at the monthly change in total employment. This is the total number of jobs gained or lost in each month. Throughout 2006 and 2007 we were adding an average of about 130,000 jobs a month. But you can definitely see that by the end of 2007, things were starting to slow down. Finally, let's look at private-sector layoffs in each month. Just like payroll employment, you can see signs of trouble by the end of 2007.

Now let's look at what happens to these three indicators as the recession begins and then accelerates. Through the first half of 2008, GDP stagnates. And then in the second half, things get dramatically worse. In the fourth quarter of 2008, GDP drops by an astounding 9 percent. Now, let's look at layoffs over that same time period. As the economy contracts, private companies start laying people off in greater and greater numbers. And in the last few months of 2008, layoffs begin to really spike. The private sector lays off 600,000 more people in December 2008 than it had eight months earlier.

And, not surprisingly, as the layoffs mount, the jobs begin to disappear. At the start of the recession, we lose around 100,000 jobs a month. Then 200,000. Then 400, then 800. By the time President Obama takes office, it's clear: The economy is in a free fall. In January 2009 the country loses more jobs in one month that it had in any single month over the previous 60 years.

Enter the stimulus.

Now before we get to what happened after the stimulus started, it's worth taking a second looking at just how badly things were going. Take a look at these trends. Not a pretty picture.

Now here's what happened after the stimulus began. In the second quarter of 2009, the first full quarter after the stimulus was passed, GDP still declines but at a much slower pace—just 0.7 percent—and then begins to grow again in the third quarter of 2009. Job losses also begin to slow down immediately. Leading up to the stimulus, we were losing more and more jobs each month. After the stimulus, fewer and fewer. And eventually we even start gaining jobs. And take a look at this. Private-sector layoffs actually peak in February 2009—the month the stimulus passed—and then begin a dramatic decline. By the one-year anniversary of the stimulus, private-sector layoffs are back down to pre-recession levels.

These graphs all tell the same story. By early 2009 the economy was headed off the cliff. But all of sudden, just after we enacted the stimulus, the country swerved away from the edge and started heading back in the right direction.

Perhaps it was just pure coincidence that the turnaround happened to occur at almost precisely the same moment the stimulus got started. Or, perhaps, the stimulus worked.