Normally, I’d just have put this in an update to the other two posts today about unemployment, but CEA chair Christina Romer spins so hard in this segment that it deserves its own thread. Nowhere do we hear that Romer predicted an unemployment rate below 8% if the Obama administration got its $787 billion stimulus package, and in fact, Romer talks about losing a net 216,000 jobs as if it was an improvement over losses earlier in the year:
“Two hundred and sixteen thousand [jobs] is a terrible loss, but boy, that’s about 500,000 less than were lost just six months ago.”
Losing 216,000 jobs is better than losing 700,000 jobs, but those 700,000 jobs are still lost. The 216,000 net loss in August comes on top of all the losses that preceded it; that’s what “net” means. Furthermore, as Edward Lazear explains in the previous post, we’re losing fewer jobs not because of recovery but because there are fewer jobs to lose. Current losses are not an improvement, or even “less bad,” as Romer quotes Biden as saying. It’s further erosion of employment in the US with a decrease in the rate of decline only, and only because there are fewer jobs to eliminate.
That is as ignorant a statement as claiming a -1% GDP as an indicator of a recovering economy because it’s not as bad as the quarter that preceded it. It’s still a net decline.
The unemployment rate means a lot more at this point, since it reflects the aggregate damage to the economy – and the fact that Romer and Obama have not implemented policies that stop it. That would be the same rate that Romer and the CEA said would be arrested at 8% with Porkulus. Note too that without Porkulus in this graph, unemployment would have begun to crest in this quarter:
If we are to take Romer seriously at all, she predicted in January that even absent a stimulus package, we would be approaching the peak of unemployment now and would get net growth in about three or four quarters afterward. Given that argument, how can she argue that Porkulus has any effect on either the economy or employment? The lowest curve was her prediction on employment growth with Porkulus, and the middle curve without the stimulus spending. Which curve does the actual unemployment rate data most resemble so far?