Democrats & Liberals Archives

Seasonal Hires Boosts December Jobs Report, Caps Off Year

December numbers will be subject to 2 more revisions but it’s looking like a decent end for a modest year of job growth. The economy added 200,000 jobs and unemployment fell to 8.5% from a revised 8.7% in November.

The economy added 1.64 million jobs this year overall for an average of 137,000 a month. That's nearly 50,000 jobs above what it takes to keep up with population growth which is just under 90,000 a month right now. The private sector alone did better with 1.92 million new jobs or an average of 160,000 per month.

The private sector under President Obama's watch has now seen 22 straight months of growth worth 3.156 million jobs. Overall during Obama's term in office we are at a net loss of just 1.663 million jobs. That's pretty good considering we lost 4.2 million jobs in Obama's first 12 months on the job. It will be close but Obama still has a narrow window of growth that would allow him to tout a net increase in jobs overall during his time. Coming from -4.2 million back into the black will be a strong argument for giving him four more years.

But many times people don't care about job numbers as much as the unemployment rate which gets repeated often by the media. What Obama will need for a stronger argument is for unemployment to be below 8.2% which is where he started. But with many folks predicting more modest growth this year is something like 7.9% still an option for Obama between now and the report that comes out in October a few weeks before the November election? I think so.

This year the month over month growth in workforce was an average of 16,000 people per month and the number of unemployed persons declined an average of 116,000 people per month. If we used that over the next 9 reports we would be at 7.8% unemployment by the time the October report comes out for September 2012 numbers.

But what about the idea that as confidence returns to the market the unemployment number will go back up first? I tend to think that will be hardly noticeable given how slow growth has been. If we were going to boom next year I'd predict there would be a flood of people back into the workforce. Instead I predict a slow trickle that will show very little month to month change.

First it's good to remember that any growth the workforce due to people returning will be added back to the workforce value and the unemployed value with unemployment being the ratio of those two values. The workforce value is very large at 153.887 million people. Unemployed is just 13.097 compared to that.

What it would take for unemployment to stay virtually the same over the next 9 months is for the workforce to consistently grow at about 100,000 per month and there to be almost no change in unemployment. With a workforce growth of 100,000 even a net decline of 90,000 unemployed persons will have the value down at 7.9% by October.

I think it's possible given the workforce trend over the last decade that we see another year of almost no net growth in the workforce and a continued decline of unemployed persons around 100,000 per month which would again arrive at 7.9%.

As much as 7.9% is wishful thinking on my part there is fairly strong evidence in the labor trends to suggest such a thing is possible. So what will be the economic argument against Obama if he's seen positive job growth during his time in office and unemployment that has returned down below the 8.2% it was on the reference week before he was sworn in?


Posted by Adam Ducker at January 6, 2012 8:47 AM
Comments
Comment #334123

It would have been faster and stronger. Presidents get to be like the Rosters that take credit for the sunrise, but their policies can make some difference. Remember that during the month of September in 1983 we produced more jobs than we did all year in 2011. But let’s be happy things are turning up finally, even if it is a couple of years after “recovery summer” and the rates are not high.

The statistics will be “unfair” to Obama, as you say. The unemployment rate will not move very much, as discouraged workers return.

On the plus side, presumably people will notice that is is easier to find work and will be happy about that.

The whole country will do better under new management. People decided they didn’t like Bush. The new guy was promising, but didn’t work out.

Posted by: C&J at January 6, 2012 10:28 AM
Comment #334125

Ya know C&J I have never heard a rooster take credit for the sunrise. I have heard people giving credit to the rooster for the sunrise due to illogical thinking. Which brings me to my point. What does September 1983 job numbers have to do with 2011? Can we not same the same thing about each and every year GWB was in office as we can about 2011. And this was before the financial meltdown.

Continuing on with more illogical thinking you say “The whole country will do better under new management” but what on earth makes you think this would be so? It is not like we can go and select from many qualified people for the job as can be done in the private sector. In order to change management we will have to accept the repub, probably Romney, but then we find out that Romneys advisers are the same group we saw in action when GWB was screwing things up.

http://www.huffingtonpost.com/mj-rosenberg/romney-iran_b_1187286.html

The way I remember it you guys sold GWB as the answer to America problems back in 2000 and we see how that has turned out. Why do you think we should believe you this time around.

Posted by: j2t2 at January 6, 2012 12:26 PM
Comment #334126


It would have been faster and stronger?

Typical Republican response, no substance, only things would have been better with Bush.

Jack has argued that the first Bush recession was the Clinton recession and the second, Obama’s. And in between, he has argued that presidents don’t have much control over the economy.

So, the economy is improving and Obama still has the wag the dog option.

Since the next Republican probably will, Obama might as well get in on the new American empirical policy of preemptive war.

The summer of recovery was followed by two years of determined obstructionism. As a result, this somewhat good news could be labeled miraculous and suggests that Obama, rather than Pat Robertson, has the ear of God.

While channel surfing the other day, I landed on the 700 club just in time to hear Pat pronounce that the Bible, yes, the Bible predicted the economic collapse and destruction of the United States because it’s people elect a president (Obama) who promotes policies the vast majority of Americans disagree with.

Pat Robertson has a tax exempt status?

Doesn’t the Bible warn the faithful to be vigilant of deception? Who is more capable of deceiving the faithful, Obama, whom they don’t trust, or Robertson?

Those who have faith in laissez faire rather than God are in the same boat.

Posted by: jlw at January 6, 2012 12:28 PM
Comment #334127

“Can we not same the same thing” should be “Can we not say the same thing”

Sorry.

Posted by: j2t2 at January 6, 2012 12:29 PM
Comment #334128

C&J:

“It would have been faster and stronger.”

How so?

“Remember that during the month of September in 1983 we produced more jobs than we did all year in 2011.”

Not only is that not true (1,114,000 in Sep 1983 vs 1,640,000 in 2011), it’s also misleading. The average for the year was just 293,000 per month. That month’s higher than average growth was partially due to the fact that the month before had -300,000 jobs. The growth that year was twice what it was in 2011 but you can’t cite September alone simply to make 2011 look worse than it is.


“…even if it is a couple of years after ‘recovery summer’ and the rates are not high.”

You aren’t still pretending that “recovery summer” was meant as “the summer of recovery” and not simply “the summer that key parts of the recovery kicked in,” are you?

“The unemployment rate will not move very much, as discouraged workers return.”

We’ll just have to wait and see on that one I suppose.

Posted by: Adam Ducker at January 6, 2012 12:34 PM
Comment #334129

I’m still waiting on the requisite right-wing argument that these good numbers today will be revised downard next week…somewhere some how some way. Still waiting on a source for that claim which is made quite often around here…

Posted by: Adam Ducker at January 6, 2012 1:42 PM
Comment #334133

All

I do not believe that presidents “create” jobs directly. They can help create conditions that allow for prosperity.

So I don’t blame Obama for the crappy conditions of the last couple years. But I know that you guys live on this kind of thing. Liberals blamed Bush for the poor economic conditions of 2001-2. They blamed Reagan for conditions of 1981-2. They credited Clinton for growth of 1993-4. So if speaking your own language, we can trash Obama for his first two years.

If you all want to accept that presidents can only create long run conditions that create prosperity, or not. Then we would also be speaking the same language. However, if we accept this, then Obama pissed away billions of dollars for nothing.

What I think is that Obama thought that this recession would end as others had and that he could say that his spending had done the trick. He also wanted to extend the power of the state, because he believes in government growth. He saw this as a great chance to do two things he thought were good: take credit for recovery and make government bigger.

He lost this gamble.

I also believe that Obama’s massive stimulus spending may have artificially moved some economic activity to earlier period. On the plus side, this made the recession shallower. But it was not sustainable. It is like burning money under a thermometer in raise the temperature.

The spending has caused the recovery to be weaker. Obama shot his rod.

Adam

Re recovery summer etc., this is what the Obama folks said. If recovery had come, would they have attributed this to random chance or normal bounce after a recession?

j2t2 & JLW

Bush is not running again. Romney is a different man. We also have several years of experience that has changed conditions.

We now know that housing was unsustainable. I won’t make you all mad by blaming Dodd and Frank, but I will point out that both those guys evidently thought it would rise forever or at least as long time. This mistake was not a Bush thing. In fact, Bush administration folks tried to rein it in in 2006.

Speaking of housing - Chrissy and I had money in 2005. We could have bought a bigger house, but we thought it was not a good buy.

We also now know what Obama can and cannot do. In 2008 we didn’t know the man. He could sell hope. Now we can judge experience.

With what we know now, Obama looks worse; Romney looks better; Bush is retired.

Posted by: C&J at January 6, 2012 6:18 PM
Comment #334137


C&J, I understand how frustrating this economic news must be for Republicans.

Posted by: jlw at January 6, 2012 7:08 PM
Comment #334140

“We now know that housing was unsustainable.”

“This mistake was not a Bush thing. In fact, Bush administration folks tried to rein it in in 2006.”

C&J,

Absolute nonsense. The Bush administration was front and center on pushing housing, particularly minority housing ownership. You conveniently forget the “Ownership Society” of George W. Bush. You conveniently forget the American Dream Downpayment Act. Lawrence B. Lindsey, Mr. Bush’s first chief economics adviser, said “there was little impetus to raise alarms about the proliferation of easy credit that was helping Mr. Bush meet housing goals.”

“No one wanted to stop that bubble,” Mr. Lindsey said. “It would have conflicted with the president’s own policies.”

This article should refresh your memory: http://www.nytimes.com/2008/12/21/business/21admin.html?pagewanted=1

Posted by: Rich at January 6, 2012 7:55 PM
Comment #334146

jlw

Doesn’t frustrate me at all.

Personally, I do not think that presidents should be elected or reelected based on the performance of the economy. It is much like you being judged by the characteristics of the local weather. But I understand that most voters don’t see things my way. The economy will be a big deal.

As I wrote, Obama gambled that the economy would improve with time and that he could get credit for it with is programs. He lost that gamble. He promised short term growth and didn’t get it. Ironically for him, the recovery is coming as his programs wind down.

As spring finally follows winter, the economy is improving. But it won’t get better fast enough to make Obama look good. When Bush I was running, the economy started to improve a whole year before the election. But the practical effects were not evident until after the election. Obama is just too late.

I am mendacious enough to accept this outcome. President Romney will take office, much like President Clinton, on the upswing not yet manifest. I have confidence that his better policies will help maintain the growth.

Barack Obama will have the glory of being the first of no doubt many presidents from minority groups. He will be seen as a charming man of historical significance who was just in over his head. Historians will speculate whether or not he could have been a better president has he been more “seasoned” or whether he had to seize the moment.

I am proud of Obama because of what his election says about the U.S. It will makes us a better country sooner. I love the idea of Obama. But I will be glad in practice when he has become part of history.

Rich

The article you link says it all. The NYT has become as liberal in its analysis as WSJ is conservative. As with all media, you have to read between the line or maybe in the lines.

Here is a key sentence. The first part is factual. The second part elides so smoothly to interpretation that I almost didn’t notice and I am sure you did not.

“The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. “

What does the author say here? She factually says that Bush wanted to reform. Then she interprets implying that a deal with Democrats was really possible, that is was a good deal and that Bush wouldn’t take it.

Bush was complicit in this in the same way Obama was complicit in the failure of his policies. Democrats managed to block reform efforts.

The interesting things is that Republicans called for more regulation, while Democrats balked.

In 2005, John McCain and others tried to reform the government’s involvement in lending. Democrats also blocked this reform. McCain is/was usually against regulation, but he saw the problem with this. http://www.govtrack.us/congress/bill.xpd?bill=s109-190

A good historian goes to sources This is what McCain said in 2005 - before the crisis. This is not hindsight.

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.


Posted by: C&J at January 6, 2012 9:32 PM
Comment #334153

“What does the author say here? She factually says that Bush wanted to reform. Then she interprets implying that a deal with Democrats was really possible, that is was a good deal and that Bush wouldn’t take it.”

C&J,

Ok, you don’t believe the author. Fair enough. But what about Mike Oxley, Rep. Ohio, Chairman of the House Finance Committee? This is what he had to say about the House bill of 2005 that strengthened regulatory control of the GSEs and had the support of ranking minority member, Barney Frank:

“All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”

“Adamant that the only solution to the problems posed by Fannie and Freddie was their privatisation, the White House attacked the bill.”

“We missed a golden opportunity that would have avoided a lot of the problems we’re facing now, if we hadn’t had such a firm ideological position at the White House and the Treasury and the Fed,” Mr Oxley says. http://www.ft.com/intl/cms/s/0/8780c35e-7e91-11dd-b1af-000077b07658.html#axzz1ikJ6lH5Q

Posted by: Rich at January 7, 2012 12:17 AM
Comment #334154

C&J: “Re recovery summer etc., this is what the Obama folks said.”

Show me where they said “recovery summer” was meant to be “the summer of recovery.” You can’t. If you don’t believe me let’s hear it from the folks you say you’re quoting:

The Administration today kicks off “Recovery Summer,” a six-week-long focus on the surge in Recovery Act infrastructure projects that will be underway across the country in the coming months – and the jobs they’ll create well into the fall and through the end of the year. The Recovery Act has already funded tens of thousands of projects and put about 2.5 million Americans to work, but summer 2010 is actually poised to be the most active Recovery Act season yet, with tens of thousands of projects underway across the country that will help to create jobs for American workers and economic growth for businesses, large and small.

“If recovery had come, would they have attributed this to random chance or normal bounce after a recession?”

I don’t understand what you’re talking about. Recovery from the recession began in June or July 2009. We’re not done recovering by a long shot of course. There’s a difference between ‘recovery’ and ‘recovered.’

Posted by: Adam Ducker at January 7, 2012 12:32 AM
Comment #334155

The big picture is the economy is structural broken. Corporate board policy, our trade policy, our banking policy and our tax policy all combine to push income to the top while stagnating idle class incomes. Until these structural changes are addressed we will be in persistent dull drums. Any policy push in the Republican direction will only make things worse. When we get out of this it won’t be subtle… major changes will have occurred more along the lines of the FDR revolution.

A great book by a professed republican… a bit dry … but very good at explaining what went wrong.. the structural changes.. is John Bogles ( former CEO of Vangaurd Group) , Battle for the Soul of Capitalism. Any middle class person voting republican is voting against their own interest out of willful ignorance or religious dogmatism on social issues.

Posted by: muirgeo at January 7, 2012 1:24 AM
Comment #334156

C&J wrote, “Remember that during the month of September in 1983 we produced more jobs than we did all year in 2011.”

Reagan added 1.7 million government jobs over his 8 years. Obama has seen
government jobs decrease by 650,000 in 3 years…. but that’s what you republicans want.

So if Obama was adding government jobs at a monthly average that Reagan did there would be about 1.3 million more jobs right now…. but again republicans did not let him do that with the endless obstructionism and their record breaking filibustering and now the economy is far worse off then it could have been.

Posted by: muirgeo at January 7, 2012 1:56 AM
Comment #334159


It’s amazing how reactionary the Republicans have become since Reagan. Ran their train off the track and their only hope of getting back on track is to destroy Obama’s presidency.

Posted by: jlw at January 7, 2012 2:45 AM
Comment #334169

Rich

I DO believe the author. I just am not sure she understands the complete purport of what she is telling us. She tells us that Bush tried, but failed to reform the financial system before it collapsed. That means that he is indeed partly to blame, but his is the sin of weakness. More culpable are those who blocked the reforms.

Re Frank - You know that I am not usually this blunt, so please excuse me, but Frank is a liar. He is now trying to rewrite the history of his own nefarious role. What he says now is in conflict with what he said then.

Adam

Recovery summer v summer of recovery. I don’t know. Sort of like people of color v colored people. In non-PC English you could use these terms interchangeably.

The paragraph you pasted indicates that the WH thought it would be a recovery summer and the linked press release is full of predictions that did not come true.

muirgeo

I don’t think that the economy is strucurally broken, but I agree that it need lots of reform. That is why we all should be outraged that the Obama folks dropped the ball, or more correctly never ran with it at all. They talked and their words were “a tale told by an idiot, full of sound and fury signifying nothing.”

jlw

I fear that Obama doesn’t have the requite skills or talents to be a good president. His team has proven incompetent or uninteresting in doing the structural reforms we need.

The system must be renewed and repaired. We cannot “go back” to Reagan. Reagan gave us the outlines of reforms that gave us 25 years of prosperity - a great record. Now we have to do something to get us 25 more years. Obama gave us ideas from the 1970s, the ones we had to change in the 1980s. We need ideas for 2020.

Posted by: C&J at January 7, 2012 9:55 AM
Comment #334170

C&J: “Recovery summer v summer of recovery. I don’t know. Sort of like people of color v colored people.”

I don’t get how you see those as similar. Recovery Summer refers to the “American Recovery and Reinvestment Act” and not the economic recovery itself. It’s not interchangeable.

Let me quote again:

The Administration today kicks off “Recovery Summer,” a six-week-long focus on the surge in Recovery Act infrastructure projects…

If it were a “summer of recovery” why would it be a “six-week-long focus” instead of three months?

My point is simply that you and others have used “Recovery Summer” to say Obama predicted everything would recover that summer and it hasn’t so “Recovery Summer” failed. You’re being dishonest. It was an event highlighting recovery projects and by it’s very nature it did not fail.

“…the linked press release is full of predictions that did not come true.”

Like what?

Posted by: Adam Ducker at January 7, 2012 12:17 PM
Comment #334171

Adam

My impression remains that the Administration told us that the recovery was on the way. We have had their recovery. It just is very poor.

If it was six months, how did those six months work out? Unemployment was 9.5 in June and 10% six months later. A year later (June 2010) it was back to 9.5%. So more than a year into the massive stimulus and the summer of however you want to use the genitive case we had … drum roll … exactly the same high level of unemployment.

Good job Barack & Joe.

re predictions

Highway Projects: There will be six times as many highway projects underway in July 2010 as in July 2009 – projects will surge from 1,750 last summer to over 10,000 this summer.

Clean and Drinking Water: This summer over 2,800 clean and drinking water projects will be underway versus just over 100 last summer – more than 20 times as many.

Did these things happen? 6x; 20x? I suppose if you are very liberal in how you count projects.

Posted by: C&J at January 7, 2012 12:36 PM
Comment #334172

c&J: “My impression remains that the Administration told us that the recovery was on the way. We have had their recovery. It just is very poor.”

I agree. It was on it’s way and it’s still in progress.

“So more than a year into the massive stimulus and the summer of however you want to use the genitive case we had … drum roll … exactly the same high level of unemployment. “

Recovery Summer said nothing about the state of unemployment but that only shows you’re still using the term to dishonestly project a sense of failure on Obama.

Recovery takes 2 or 3 years even for mild recessions. This was a bad one so expect it to be several more years before we’ve reached pre-recession levels in unemployment. We are already at pre-recession levels or very near for things like the stock market and GDP.

“Did these things happen? 6x; 20x? I suppose if you are very liberal in how you count projects.”

You tell me. You claim they’re wrong so I assumed you know the correct values.

Posted by: Adam Ducker at January 7, 2012 1:15 PM
Comment #334174

Adam

I don’t know the “correct” values, but I do know that there are not six times as much work on the highways.

Obama didn’t have the experience to understand “shovel ready” as even he admitted. http://content.usatoday.com/communities/theoval/post/2011/06/obama-jokes-about-shovel-ready-projects/1

Re recessions -they usually do end. Politicians take credit. Obama hoped to take credit for the recovery, like a guy who claims in February that he can make it warmer in a few months. But he gambled and lost. Beyond that, his own policies slowed recovery. He messed up.

Re recession (2) There is no universally agreed definition for when a recession ends. But clearly unemployment has hung around like a fart in a phone box during the Obama time. Maybe it is not his fault. But he was also unable to help, despite the rhetoric and massive spending. So what good is he?

Posted by: C&J at January 7, 2012 2:41 PM
Comment #334177

C&J,

More culpable are those who blocked the reforms.

And who would that be? In 2005, the GOP controlled all branches of the government.

Posted by: Warped Reality at January 7, 2012 5:52 PM
Comment #334180

Warped

Ask Stephen how a party in opposition can block initiatives. He blames Republicans for everything that happens even when Dems control the whole show.

But seriously, if guys like Frank and Dodd dig in, it is hard to move them. Many Republicans also were culpable, but most Dems with some Republicans could do the trick.

Contrary to myth, Republicans don’t always work in “lockstep”

Posted by: C&J at January 7, 2012 6:50 PM
Comment #334182

“I don’t think that the economy is strucurally broken, but I agree that it need lots of reform.”

jlw


If you don’t think our economy has structural problems that do not allow a typical recovery you simply are uninformed.

Do you realize corporations have had RECORD profits the last 3 quarters? If you understand that and look at the rest of the economy you understand that something is broke. Do you realize we’ve had some 30 to 50 thousand companies move off shore the last 10 years? Do you understand the nature of our trade deficit? Do you understand the nature of corporate boards and the incentives that pit managers (CEO/boards) and short term profits against owners/shareholders and real profitability. Do you understand that finance as an industry has went from taking 13% of all corporate profits to now 40% of all corporate profits? And then there is tax policy that has shifted the tax burden from the wealthy and corporations to localities and the middle class. You really should look into reading John Bogle’s book.

Posted by: muirgeo at January 7, 2012 8:04 PM
Comment #334184

muirgeo

Thing are rarely so black and white. The system has structural problems but it is not broken. System are in need of constant change and maintenance. This is where we are. That is where we almost always are.

We need to fix those things thing that are wrong. That is what Obama promised to do and failed to do. Each recovery requires changes. This is also nothing new. It is not unique to Obama. He just like to play drama queen while not actually doing the right things.

I understand the things you mention. It is just that I have heard the dire warnings before. This time is always different. We need to solve today’s problems, which is why we need someone who can do a better job than Obama.

Posted by: C&J at January 7, 2012 8:15 PM
Comment #334188
Ask Stephen how a party in opposition can block initiatives. He blames Republicans for everything that happens even when Dems control the whole show.

The Republicans used the filibuster in a manner without precedent in order to impede the Democratic Party’s initiatives. That was not the case in 2005, the regulation bill was never filibustered. You failed to answer my question, but I’ll give you the answer: Tom DeLay & Bill Frist, as Majority leaders they had the sole authority to decide whether or not pending bills were brought to the house floor and they decided not to vote on the GSE regulation bill. Barney Frank and Chris Dodd played no role in that decision. If you have the time, there’s a
very good discussion of this issue here (read all the comments).

Contrary to myth, Republicans don’t always work in “lockstep”
There is a great deal more unity in the GOP than in the Democratic Party. The Democratic Party includes conservatives such as Landrieu, the Nelson Brothers, etc. There really aren’t any equivalent people on the other side. Posted by: Warped Reality at January 7, 2012 11:30 PM
Comment #334190

C&J: “But he was also unable to help, despite the rhetoric and massive spending. So what good is he?”

It darkens the picture a little when you stay in denial about the success of the stimulus in creating or saving about 2.5 million jobs and adding back several points to GDP.

If you measure the stimulus based on it’s actual goals you’ll find it came close to meeting those goals. If you measure the stimulus on imaginary goals you’ll almost always find it lacking.

Posted by: Adam Ducker at January 8, 2012 1:31 AM
Comment #334193

Adam

One of the biggest problems with government, especially in the area of economics, is its challenge of measuring effectiveness of programs.

Government (private firms too) can rarely measure actual outcomes. Social and economic systems are simply too complex to understand with simple measures. So bureaucrats develop theories about how things should work and then measure backwards from inputs.

This is how these jobs were “created or saved”. Government bureaucrats are applying economic theory (not fact). They are extrapolating that they spent x amount of money, applying a multiplier and assuming that x amount of government money creates y amount of jobs.

This multiplier is a point of disagreement. We don’t know how many jobs a given amount of money creates. In the complex environment, we also don’t know how many jobs government action might destroy, by diverting resources and changing incentives.

I know that I overuse the phrase “rooster taking credit for the sunrise” but lots of government activity is like that. Things improve by themselves and government officials claim credit. Sometimes they believe the deserve credit.

Government has a duty to protect the financial system. No other entity can do that. That is why I supported TARP. I didn’t like it, but it was needed.

The stimulus is much more shaky territory. Obama said that he wanted to build infrastructure. I would have supported this. Unfortunately, as I knew and Obama learned, there is no such thing as a shovel ready project that is not already in process. So the stimulus just spend money.

It looks like the stimulus just relocated economic activity. People made more purchases in 2009 than they would have, at the expense of purchased they would have made in 2011. So it may have given us more activity in 2009 at the expense of the recovery now.

It also interfered with incentives and information flow. House prices were and remain too high. Government cannot maintain prices at the higher level and this is not a good thing anyway, i.e. prevent houses from returning to a more affordable level.

So we have to ask what would have happened absent the stimulus. Government naturally expands in hard economic times, so we are talking about what Obama piled on in 2009 (things like cash for clunkers, special breaks etc) This is impossible to know for sure, but let’s think about it.

Take the cash for clunkers as an example. It was very popular. What did it do? It moved purchases forward, but didn’t really change the situation looked at in a longer period. If this was free, it would not hurt. But it was not free. The government had to borrow money to do it. It diverted resources from something else in the future to pay for the program in the present.

One more “life lesson”. I had a serious back pain. It lasted for three weeks. People said I should go to the doctor, but I didn’t. The pain went away. Had I gone to the doctor, we both might have thought that whatever he did had cured the problem. Worse, I might have had some treatment or drugs that might have exacerbated the pain. I would be tempted to continue treatment on the theory that the pain would be worse otherwise.

When nothing can help, the best choice is to do nothing.

Posted by: C&J at January 8, 2012 6:16 AM
Comment #334195

C&J:

“Government bureaucrats are applying economic theory (not fact).”

But yet both government and private groups (
Moody’s, MacroAdvisors, JP Morgan Chase, IHS/Global Insight, Goldmach Sachs, CBO, Council of Economic Advisors
) have come to about the same conclusion: The stimulus added millions of jobs and boosted GDP several percentage points.

I don’t doubt they are applying economic theory but these are highly educated guesses, not just simple hunches.

“So it may have given us more activity in 2009 at the expense of the recovery now.”

And by this statement I assume you’re agreeing that it did boost economic activity (which increases GDP and creates jobs). You just won’t say how much and you won’t agree with the view of the groups above.

I don’t totally disagree with you. Things like cash for clunkers certainly moved economic activity forward.

It’s good to note that was one of the goals of the stimulus. It was supposed to create an artificial floor to help get us into recovery sooner. But it was only supposed to boost GDP by 3.7% and jobs by 3,675,000 and prevent growth in unemployment by 1% to 1.5%. All of that is by the end of 2010. It wasn’t designed to boom our economy or end high unemployment. The stimulus functioned just slightly less than designed but it has certainly failed in the minds of it’s critics that assign random goals and keep moving the bar on it.

“When nothing can help, the best choice is to do nothing.”

You deny independent reports of the stimulus impact which models the recession with and without the stimulus. They find it did help so you’re incorrect. But doing nothing? If had we left GDP to decline 2% or 3% more and had we lost 10 million or 11 million jobs instead of 8, would we have been better off now than we are with the stimulus? If so, on what do you base that on?

Posted by: Adam Ducker at January 8, 2012 9:33 AM
Comment #334196

C&J: “I don’t know the ‘correct’ values, but I do know that there are not six times as much work on the highways. “

How do you know that? There’s been a lot of light on the stimulus and the projects involved. Let’s look at the numbers in question:

Highway Projects: There will be six times as many highway projects underway in July 2010 as in July 2009 – projects will surge from 1,750 last summer to over 10,000 this summer.

As of July 2010 DOT had approved 12,750 projects and had given 11,144 notice to start. This doesn’t prove without a doubt that 10,000 projects were under way but it does give a sense that 10,000 is in the ballpark.

Clean and Drinking Water: This summer over 2,800 clean and drinking water projects will be underway versus just over 100 last summer – more than 20 times as many.

As of 2011 there were about 1,870 clean water projects, and 1,342 drinking water projects for a total of 3,212. That’s another figure in the ballpark.

Home Weatherization: This summer, 82,000 homes will be weatherized versus 3,000 last summer – 27 times as many homes this summer as last.

Considering that 600,000 homes have been weatherized because of stimulus money, I’d say it’s safe to assume 82,000 homes were weatherized between between July 2009 and July 2010.

National Parks: This July, nearly 800 projects will be underway at national parks versus just over 100 last July – 8 times as many this summer.

NPS did in deed get $750 million for nearly 800 projects. Whether all 800 were under way is questionable though. I can’t find a decent document suggesting one way or another.

Posted by: Adam Ducker at January 8, 2012 10:35 AM
Comment #334221

C&J,

No need to be blunt. I wasn’t quoting Frank. I was quoting the Republican Chairman of the House Finance Committee, Mike Oxley of Ohio, who said that the only thing they got from the White House was the “one fingered salute” upon House passage of Republican sponsored H.R. 1461 increasing regulatory control of Fannie and Freddie in 2005. Please note that the bill had 19 Republican co-sponsors. The Republican leadership in the Senate let the bill die in committee.

Interestingly, for those conservatives that think that the Bush administration was concerned about the dangers of Fannie and Freddie involvement in minority home ownership, think again. The White House press release on the House GSE regulatory bill was critical of the fact that it didn’t focus the GSEs more on minority lending: “The Administration strongly believes that the housing GSEs should be focused on their core housing mission, particularly with respect to low-income Americans and first-time homebuyers. Instead, provisions of H.R. 1461 that expand mortgage purchasing authority would lessen the housing GSEs’ commitment to low-income homebuyers.” http://georgewbush-whitehouse.archives.gov/omb/legislative/sap/109-1/hr1461sap-h.pdf

I think that all would generally agree, particularly in retrospect, that the concern of the Bush administration about the fiscal situation of the GSEs was warranted. However, the concern basically involved their investment portfolio not their core business portfolio. “Housing GSE debt is issued largely to support sizable portfolio investments that are unnecessary to fulfill the GSEs’ housing mission.”

Posted by: Rich at January 8, 2012 5:57 PM
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