WH: Unemployment will get worse in 2010

posted at 10:55 am on February 11, 2010 by Ed Morrissey

Thirteen months ago, Christina Romer and the aggregated economic advisers of Barack Obama claimed that the stimulus package they demanded from Congress would curtail unemployment by stimulating the economy, keeping the unemployment rate under 8% in 2009 and forcing in down throughout 2010.  Yesterday, Romer essentially admitted that her analysis had completely failed.  Now, even with the 2009 Porkulus and another stimulus bill Obama will push for Congressional approval, the US economy will only generate an anemic 95,000 jobs a month in 2010 — not enough to keep up with population growth:

President Barack Obama’s top economic advisers offered a cautious forecast on Thursday that U.S. job gains for 2010 will average 95,000 a month, with analysts expecting hiring to expand by spring.

In a conference call with reporters on Wednesday, Christina Romer, the head of the White House Council of Economic Advisers, said that the administration’s projection is below the consensus of private Blue Chip forecasters, who envision a more optimistic monthly average of 116,000 jobs. …

The administration’s downbeat 95,000 monthly jobs projection follows a similar cautious forecast offered with the president’s proposed fiscal 2011 federal budget on Feb. 1. Romer and budget director Peter Orszag then projected that unemployment would remain high, at 9.8 percent late this year and 9.2 percent at the end of 2011.

“These job projections are very reasonable, but they are also very disappointing since they imply the unemployment rate will remain very high for a very long time,” said Larry Mishel, the president of the Economic Policy Institute, a liberal research group. “This is because we need to create at least 100,000 jobs each month in order to absorb new workers and keep the unemployment rate from rising. It suggests that policy is not being aggressive enough to drive down unemployment.”

The issue isn’t whether the policy is aggressive enough; it’s just that it’s not working at all.  To compare, let’s take a look at that rather infamous Romer chart from her original analysis:

In this chart, we can see that Romer predicted that the Obama economic polices would have cut off the rise of unemployment by the third quarter of last year, and that they would generate sufficient new job growth to begin lowering the rate below 8% in 2009Q4.  In 2010, Romer predicted those policies would take almost a full percentage point off of unemployment, and by the end of 2011 would have reduced it by about one and half points.  Without Porkulus and the White House’s economic policies, Romer predicted a rise to 9% in 2010Q1 and flat growth for most of the year, with about a half-point reduction in 201oQ4 and a full point in the following year.

What does she predict now?  Actually, a worse case than her previous worst-case scenario.  Instead of taking one and a half points off of unemployment by the end of 2011 (which was roughly the case in both scenarios), we now will take just a half-point off by the end of 2011.  Instead of being at 6.5% at that time (with Obama’s policies) or around 7.8% (without Obama’s policies, we’ll have an unemployment rate one and a half points above Romer’s worst-case scenario at the end of 2011.

Comparing the predictions of Romer to the actual performance, it seems clear that (a) Romer didn’t know what she was doing in that initial analysis that pressed for the Porkulus package, (b) the Obama economic policies have done more damage to the American economy than if he had just left it alone, or (c) both.  Clearly, Obama needs a new set of economic advisers and a completely different direction in policy, or we’ll be flirting with double-digit unemployment for the next several years.


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The administration’s downbeat 95,000 monthly jobs projection follows a similar cautious forecast offered with the president’s proposed fiscal 2011 federal budget on Feb. 1. Romer and budget director Peter Orszag then projected that unemployment would remain high, at 9.8 percent late this year and 9.2 percent at the end of 2011.

What a contrast to last week when Obama was bragging about all of their success in reviving our economy:


At a small business in Chesapeake, Maryland President Obama today said that the 5.7% jump in GDP last quarter “affirms” the progress in the economy.


“Today, we’ve stopped the flood of job losses. We’ve stabilized the financial system. And we can safely say that we’ve avoided that looming depression,” the president said of the GDP numbers, “we received a report that affirms our progress and the swift and aggressive actions that made it possible.”


Obama,Jan 30,2010

It is almost as if Obama is just telling the American people one thing while the reality is the total opposite.

Obama has gone from “I need 800 billion dollars for quick job creation” to “we have stopped the flow of job losses”,something even his own economic advisors admit they can’t measure or verify.

Obama has gone from bragging about having the “adults” in charge and bringing “Hope and Change” ..to..”we are going to have continued high unemployment around 9-10% level for the year because the business forecast is so grim.

Obama brags about “stabilizing” the financial system but TARP was “inherited” by him from Bush.
Home foreclosures are at an all time high,banks are far from stabilized just like the mortgage companies are far from stabilized:

Watchdog: Bank Bailouts Created More Risk in System

Updated January 31, 2010
The Associated Press contributed to this report.

The problems that led to the last financial crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

The government’s bailout of financial institutions deemed “too big to fail” has created a risk that the United States could face a worse fiscal meltdown in the future, an independent watchdog assigned to review the program told Congress on Sunday. 

…and this….

Democrats Setting Up Another Sub-Prime Mortgage Bust
May 4, 2009 |


The Wall Street Journal is running an editorial that examines how the current Congress is setting us up for our newest housing bust and bailout.

Everyone knows how loose mortgage underwriting led to the go-go days of multitrillion-dollar subprime lending. What isn’t well known is that a parallel subprime market has emerged over the past year — all made possible by the Federal Housing Administration. This also won’t end happily for taxpayers or the housing market.


The FHA is almost certainly going to need a taxpayer bailout in the months ahead. The only debate is how much it will cost. By law FHA must carry a 2% reserve (or a 50 to 1 leverage rate), and it is now 3% and falling. Some experts see bailout costs from $50 billion to $100 billion or more, depending on how long the recession lasts.

…..and this…..

Treasury lifts cap for Fannie, Freddie

J.W. Elphinstone ASSOCIATED PRESS

NEW YORK | The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.
The Treasury Department said Thursday it removed the $400 billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and most analysts hadn’t expected the companies to hit the limit.

The news followed an announcement Thursday that the CEOs of Fannie and Freddie could get paid as much as $6 million for 2009, despite the companies’ dismal performances this year.

…..and this…..

New Record Deficit Predicted

Obama’s $3.8T proposed budget predicts national deficit will crest at record-breaking $1.6T in current fiscal year

It comes as no surprise looking at the track record of failure from liberals and their policies,that this is considered “stabilized ” and “we received a report that affirms our progress and the swift and aggressive actions that made it possible.”

Typical liberal pretzel logic…..

Baxter Greene on February 11, 2010 at 12:50 PM

Comparing the predictions of Romer to the actual performance, it seems clear that (a) Romer didn’t know what she was doing in that initial analysis that pressed for the Porkulus package, (b) the Obama economic policies have done more damage to the American economy than if he had just left it alone, or (c) both.

I don’t need to leave a comment to clarify that it could very well be both? You got that covered?

Well what am I supposed to do here now?

gekkobear on February 11, 2010 at 12:51 PM

The government’s prediction was based on a single piece of information.

They knew that in the prior 10 Recessions the employment rate had begun to rebound by the 13th month, and Obama took office in the 15th month after what they had convinced themselves was the start of the Recession.

They gambled on 11 for 11 and lost.

They couldn’t possibly have thought the Stimulus would have an impact for 5 or 6 months, befause it was simply impossible to get the money out the door quicker than that.

So, your government bet everything on one piece of information.

Kind of like their “Loans to Deadbeats” policy.

But Health Scare and Crap and Tax will fix all of that and recover the fortunes that so many people have lost because of them, won’t they?

They’re due for a hit.

notagool on February 11, 2010 at 12:57 PM

Ok, maybe stolen funnies from Best of the Web?

I’m glad I already know how to speak French, because that’s where they’re taking us apparently.

AubieJon on February 11, 2010 at 11:20 AM

Yes, because we’re being led by California, they’re already there… well not quite the way you said it though.

“San Francisco Mayor Considers ‘Frenching’ City Workers”–headline, KNTV Web site (San Jose, Calif.), Feb. 9

NTTAWWT IYKWIMAITYD

Although this line from the story seems more worrying:

The plan could save the city as much as $50 million overall.

How exactly does that work?

gekkobear on February 11, 2010 at 1:00 PM

The problem isn’t the economic analysis, although there’s certainly vast room for improvement in it. The real problem is an absence of effective leadership in the White House.

ironman on February 11, 2010 at 1:01 PM

I regard this crop of “leaders” as thieves, pure and simple.

It makes me just sick that Obama had to rush, rush, rush the passage of this multi-generational theft in his first 10 days, and that it couldn’t wait a day longer.

He has owned this disaster from that day forward.

In other words Obama was a faster failure as president than even William Henry Harrison.

Edouard on February 11, 2010 at 1:09 PM

Whoa! Is that Romer standing next to Gibbs at today’s press briefing, just starting. Megan Kelly just flashed over to it.

Can’t quite come up with the words to describe that spectacle.

Yoop on February 11, 2010 at 1:09 PM

uknowmorethanme on February 11, 2010 at 10:57 AM

The increases in the unemployment premiums in several states are already forcing companies out of business.

MarkTheGreat on February 11, 2010 at 1:16 PM

They keep lying about how many people are actually unemployed anyway. But they aren’t fooling anyone. Those days are long past.

What this news really says to all of us without jobs, they aren’t going to do anything to actually fix the problem for the foreseeable future.

The number of homeless will continue to mount as unemployment benefits expire completely. On that note, I was reading a government report about the homeless and was surprised to learn that a large percentage are working.

dogsoldier on February 11, 2010 at 1:20 PM

Ugh sorry, by large percentage I mean like 10 to 20 percent.

dogsoldier on February 11, 2010 at 1:21 PM

But think of all the jobs that have been saved!

I have a friend who has a small business. He had nine employees in 2007.
Now he has one. He says he is in a hibernation mode because it is impossible to make a rational business decision under Obama-nation.

Dhuka on February 11, 2010 at 1:26 PM

Is Romer related to Reno? That’s enough to make you wake up screaming in a cold sweat.

misterpeasea on February 11, 2010 at 1:28 PM

I forgot this:

My friend who owns a business says that a tax credit to hire employees when business is bad is just ludicrous.

Dhuka on February 11, 2010 at 1:28 PM

Some experts see bailout costs from $50 billion to $100 billion or more, depending on how long the recession lasts.

Baxter Greene on February 11, 2010 at 12:50 PM

The sad thing is, after this last year, even $100B sounds like a small number.

MarkTheGreat on February 11, 2010 at 1:29 PM

Jug-eared Jesus and the entire upper tier of fools that he brought with him to the reins of government should admit that they have no idea how the economy works, resign in shame, and let the healing begin.

Socialist policies and big spending on favored constituencies can only make matters much, much worse. We are close to a perilous tipping point, if not already there.

hillbillyjim on February 11, 2010 at 1:40 PM

There are a lot of openings for Re PO men. The hourly rate is higher if you have your own tow truck. Lot of cash for clumkers traded cars without payments for car loans.

seven on February 11, 2010 at 1:50 PM

I told you so just doesn’t seem to cut it does it?

Dr Evil on February 11, 2010 at 2:08 PM

Is she considered one of the corpse-men of the Obamaclypse?

I can’t help it, I’ve been wanting to use that all day…

javamartini on February 11, 2010 at 2:16 PM

I used to take classes from her at Cal. She didn’t use to be this dumb. Leads me to believe she’s just the mouthpiece, not actually allowed to speak her own analysis.

Pablo Snooze on February 11, 2010 at 3:00 PM

Comparing the predictions of Romer to the actual performance, it seems clear that (a) Romer didn’t know what she was doing in that initial analysis that pressed for the Porkulus package, (b) the Obama economic policies have done more damage to the American economy than if he had just left it alone, or (c) both. Clearly, Obama needs a new set of economic advisers and a completely different direction in policy, or we’ll be flirting with double-digit unemployment for the next several years.

Over the past six months or so I think we’ve seen more than enough evidence that the White House and Democratic Party controlled Congress will jump on and utilize any numbers at all that will support their agenda for legislation, regardless of evidence to the contrary. If they can find just one source, however obscure, to back up their own fuzzy math, that’s what they’ll use.

But as we’ve seen with the results of similar tactics used to produce the UN’s IPCC’s climate change report, it can’t help but blow up in their faces in the long run as researching such data is practically a moment-to-moment capability with today’s technology. Plus the technology is user friendly, and every private person now has the ability to become a kind of citizen journalist when sharing the results of personal research into these issues with others.

Americans are proving to the world what happens when an informed populace becomes armed with the facts. Hence, the Tea Party movement and the push back against Big Government and Nanny States. And it is precisely because of what is happening here and elsewhere in the world that the tyrannical governments in China, Iran, Venezuela, North Korea, and many others, are desperately attempting to shut down access to the Internet and other alternative media sources.

KendraWilder on February 11, 2010 at 4:05 PM

WH: Unemployment will unexpectedly get worse in 2010

FIFY.

mrt721 on February 11, 2010 at 4:07 PM

“Comparing the predictions of Romer to the actual performance, it seems clear that (a) Romer didn’t know what she was doing in that initial analysis that pressed for the Porkulus package, (b) the Obama economic policies have done more damage to the American economy than if he had just left it alone, or (c) both. Clearly, Obama needs a new set of economic advisers and a completely different direction in policy, or we’ll be flirting with double-digit unemployment for the next several years.”

a= Well, now there’s a candidate for understatement of the year.

b= In order to acheive Alinky’s They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future. This acceptance is the reformation essential to any revolution. criteria and laying the ground work State & Municipal collapses across the map, they are employing classically the Cloward/Piven strategy to open the way for a federally imposed “solution“.
Everything is going like clockwork, while we here in HA would agree that need to be replaced,(I would use the word “deposed”, but that’s just me.)I see no reason why Obama would want to make any adjustments.

c= The snowball has already gained momentum, the requisite debt levels already acheived, biz’s are in a state of paranoid inertia due Cap & Tax, HCR, and the ripple effect of the Greek tragedy has yet to even take hold. Double-digit unemployment and double-digit inflation are inevitable and likely to stretch until 2012-15 easy.

And that’s the good news and we can return gov’t to, of and for the people in ’10 & ’12! If not we are in for a “lost decade” at the very minimum.

Have a nice day!

Archimedes on February 11, 2010 at 4:36 PM

When are Booooosh! and his inbred Neocon minions going to stop destroying the economy?

ronsfi on February 11, 2010 at 4:37 PM

That’s a man, baby.

Red Cloud on February 11, 2010 at 4:38 PM

If I were to select a perfect example of a government employee, it would be this tool.

CC

CapedConservative on February 11, 2010 at 5:51 PM

Someone should edit in real unemployment on top of that graph.

SnKArcbound on February 11, 2010 at 8:57 PM

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