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The Infamous, Updated, Romer-Bernstein Chart.

By: Moe Lane (Diary)  |  June 7th, 2011 at 09:00 AM  | 

RESIZE: AAA

Via James Pethokoukis comes an updated version of the graph (originally created by Obama’s economic advisers Christina Romer and Jared Bernstein) that has been succinctly countering (for years) any and all attempts to argue that the misnamed ‘stimulus’ worked:

For those without access to the picture: it’s a modified version of this graph, which was used to sell the idea that with a stimulus, unemployment would not rise above 8%; and that without a stimulus, unemployment might rise all the way to… 9%!!!!!! That last sentence is what usually gets emphasized in these discussions, and for good reason (it was a nitwit prediction). But I’d [like] to note that according to the original chart we were forecast to be having about 6.5% or so unemployment at this point, with that number dropping rapidly. For that matter, I’d also like to note that neither Romer nor Bernstein are currently employed by the Obama administration; they were more or less booted as quietly as could be managed, once the magnitude of the stimulus disaster was fully grasped by the White House.

Alas, the damage has been done.

Moe Lane (crosspost)

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COMMENTS

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  • http://theminorityreportblog.com Repair_Man_Jack

    Of course, they also hired Krugman’s Mini-Me Bradford DeLong as well…

  • Jeff Cooper

    With the president still using the “Blame The Previous Administration” mantra, one is forced to ask him, “When do you become solely responsible for the economic situation in the United States, Mr. President?” It is a sorry affair when the president talks in meaningless platitudes while justifying his failed bailout policy. November 2012 can’t come soon enough.

  • Death_of_the_Donkey

    The employment situation was much worse than what the data at the time (since revised, ie the red dots) showed, which may have lead to a different set of policy choices (or at least a better estimation going forward). This recession in fact did shed more jobs than economic models would predict for the GDP loss we suffered AND the recovery is creating less jobs than a similar GDP growth would predict. I personally think much of this has to do with productivity and technology (and throw some globalization in there for good measure) than any particular policy set, but that also implies that any stimulus was likely the wrong answer to our employment problem.

    Also, we need to be careful about throwing stones here, as I seem to recall that Paul Ryan’s budget plan came attached with an analysis that predicted a 2.7% unemployment rate by 2017.

  • oldbird77

    Are you against 2.7% unemployment? (j/k) The out years of all budgets on the Federal level are full of mind-blowingly optimistic predictions. None of them ever come to fruition or really matter because there is a new budget passed the next year that doesn’t correspond exactly to the preceding year.

  • GreyCloak

    Republicans added $500 billion (and more) to the Federal debt every year after Bush got elected. And they got thrown out because of it.

    Democrats have set the goal higher, adding more than a $trillion each year of the Obama administration.

    The unemployment rate in the United States was last reported at 9.1 percent in May of 2011. From 1948 until 2010 the United States’ Unemployment Rate averaged 5.70 percent reaching an historical high of 10.80 percent in November of 1982 and a record low of 2.50 percent in May of 1953.

    __Trading Economics

    Bush enjoyed a Republican Congress … Obama had a Democrat Congress for two years. Now it’s split.

    “Natural” unemployment is near 6% … despite optimistic projections, it’s never going to get below that for long.

    Congress has a choice: continue spending money that doesn’t exist, and bail out the banks and unions (and Doctors, Insurance Companies, and others) that fund elections, or own up to The People they purport to represent, and balance a budget.

  • Finrod

    I thought the largest budget deficit under Bush was ~$400 billion, in what would have been his next-to-last budget, except that the Democratic Congress pushed the 2009 budget back past the election so far that it was Obama that was President to actually sign it by the time it got passed, 6 months late.

  • Finrod

    That was intended as a reply to GreyCloak. My bad.

  • http://www.facebook.com/?ref=home#!/pages/The-Reagan-Files/144699382218118 Samuel Pennell

    I really appreciate your article, and I love it, but to be honest, it was very similar to my latest diary entry, written 4 days ago on June 3rd

    http://www.redstate.com/hardcorepreppie/2011/06/03/obama-stated-that-unemployment-would-go-no-higher-than-8/

    My article stated that unemployment was supposed to go no higher than 8% and it focused its attention mostly on Christina Romer.

    I’m not saying that the idea was necessarily taken from me, but this has happened to me several times by different authors and bloggers here on RS. I guess I feel that if my blogs are good enough to be inspiration for other, larger articles, I’d love to have a shot at writing an article for the main page/main feed. Please let me know what you think.

  • streiff

    take a hike

  • Bill S

    Accusing a contributing editor of plagiarism is contraindicated. Don’t do it again.

  • http://moelane.com/ Moe Lane

    Ripped off, that is: either explicitly or implicitly. Unless your argument relies on the notion that James Pethokoukis ripped you off (in which case, that’s not really my problem), or that I’ve been patiently waiting for someone to create an updated graph so that I could successfully rip off a vague, un-sourced, two-paragraph diary based around the rather well-known truth that this administration messed up their unemployment estimates (which would be just a silly theory for you to take).

    Sheesh.

    Moe Lane

  • http://moelane.com/ Moe Lane

    The pleasure of yelling at him a bit for his skill at How Not To Get People’s Attention would have stayed it.

  • YnotNOW

    In that anti-business policies, threat of taxes and inflation due to debt levels, harmful overregulation, etc. are preventing a normal economic recovery after the recession.

    The flaw behind the Keynsian thinking of the Stimulus (and other deficit spending) is that government must borrow (if they do not tax) any money they intend to spend, which reduces the private investment money the same amount as their spending. Either that or print money, which causes inflation with the same problems.

    If the government had stayed away from “stimulus” and other interventions (this referrs to Bush’s later years as well as Obama’s current policies), then the recession would have been deep, painful, and SHORT. Government cushioning has only made it worse.

  • aesthete

    are the Apr-May 2011 data points. While it is arguable that the numbers were wrong but the general trend reported (high unemployment plateauing to “normal” levels) correct, it may very well be that the general trend reported is incorrect, if the following months either turn out to have even higher unemployment or if they stall out at the May 2011 numbers.

  • ehud

    The liberals are constantly claiming the economy would have been worse without the stimulus. Yesterday I heard Steve Rattner saying ALL the economic models show we would be at 13% unemployment without the stimulus.

    Why have I never heard anyone make the point that THE RECESSION ENDED (June 2009) AND UNEMPLOYMENT PEAKED BEFORE THE STIMULUS HAD TIME TO KICK IN!!!!

    Look at the chart here. Only 107 billion dollars was spent in all of 2009. Most of the money was designed to be spent in 2010 to juice the economy before the elections.

    http://4.bp.blogspot.com/_nSTO-vZpSgc/SY1KMO58iSI/AAAAAAAAFj8/pXvjoLutRZU/s1600-h/Spending+Over+Time.png

  • ehud

    The biggest chunk of spending was in 2010 at 236 billion. A good bit hasn’t even been spent yet.

    That means only 343 billion was spent in 2009 and 2010. Did 343 billion of government spending, mostly to government unions, somehow save us from a depression and keep us below 13% unemployment?

    WHY DO REPUBLICANS SUCK AT ARGUING WITH LIBERALS?

  • The_Gadfly

    the recession hasn’t ended, we are just kicking around on a plateau before the next phase. Whether that plateau turns out to be the cliff edge we are about to fall over, or just the dry gully before we start climbing back out is yet to be determined.

  • dajeeps

    Market economics isn’t about what is going on in the present. It is part psychology, and based on what the participants believe the future will look like. We did not have to wait two years to find out if “the stimulus” worked or would ever work. If it was ever going to work, the markets would have responded the day it was brought up. Instead, most kept going down like there was no bottom in sight for weeks after the bill passed. There was no need to quibble over a percentage here or there regarding the depth of employment figures; by the way the markets behaved, one could tell it would be really bad.

    Of course it is beyond the scope of most liberals I know to be able to read markets when the result conflicts with their pet projects or markets aren’t going along with them. Their solutions are hammers looking for nails, and when it doesn’t fit, they shove it, and if it breakes they write it off as needing to be replaced anyway. They have very little to fear from failure because the liberal circle sustains them all just for spouting things that make no sense, that everyone else will eventually pay for. It is easy for them to forget that all of what they do have real consequences, financial tragedy playing out in housholds across the country, with hardly anyone left untouched, because as long as they toe the line, they have nothing to worry in suggesting $800B in spending on – just stuff.

    If anyone outside of government were to attempt this, it would be called racketeering, but not for them – no. After all they did it with the best of intentions, unfortunately those greedy capitalists just wouldn’t cooperate.

  • arthurmanger17

    This command and control of our economy just needs another five year plan. Oh and print more money so we can get paid with so much of the worthless stuff that we can stuff our mattress with. Thus we can get a good night sleep knowing that the communist have another plan, all we have to do is be smart enough to reelect them.

  • ehud

    the point is that the economy started growing on its own without the stimulus, which is not what the MSM would have you believe.

  • ihateliberals

    everything that is wrong. His theory is tht everything is much worst than they thought and it will take another 4 years to get things fixed. Most Liberals believe him. All he wants to do is be re-elected doesn’t matter how.

  • sccrenny

    but I found even more devastating the quote from Larry Lindsay at the end of the article-
    “[E]ven if you buy the White House?s argument that the $800 billion package created 3 million jobs, that works out to $266,000 per job. Taxing or borrowing $266,000 from the private sector to create a single job is simply not a cost effective way of putting America back to work. The long-term debt burden of that $266,000 swamps any benefit that the single job created might provide.”

  • The_Gadfly

    I think it states very clearly that the recession hasn’t ended. That means the economy hasn’t started growing. Yeah, I know the raw stock market and GDP numbers are up, but I define growth as growth in real terms. I think they aren’t measuring inflation correctly, and that in true inflation adjusted numbers GDP and the stock market are down. This frankly is what people feel in their bones right now.

  • williamjameson

    what a Stimulus is”. Yea right, a big gov big spender bill and as predicted the Republicans and economists were right.

    Keynesian nonsense. Its time for a shift to Austrian Economics.

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