I’m pretty sure this isn’t helpful for the Obama re-election campaign message. His ads talk about the Great Recession, and how his audacious leadership has led us out of it into … oh, I guess we can call it the Great Stagnation. Paul Krugman’s declaration of a depression interferes with that message just a tad, no?
A few points of fact to check on Krugman’s employment claims, before people assume he’s wrong. He is actually correct on the stats for public and private sector employment, but only to the limited context and meaning he uses. From the BLS, here is the chart for private-sector employment over the last 10 years:
And here is the same chart for government employment:
The missing context of private-sector employment is population growth. The better way to view whether we’ve returned to the level of employment at the start of Obama’s term is to look at the participation rate in the labor force, and that shows something significantly different:
Of course, this doesn’t break out private vs public employment, but the difference in public employment in that time is about 500,000 jobs. That would account for 0.32% in the participation rate. Adding them back in would move the participation rate from 63.8% (nearly a 30-year low) to 64.1%, still significantly below the 65.8% when Obama took office, or the 65.7% when the recovery started.
As far as this causing a depression at the moment, that’s as silly as Krugman claiming that the US has made any kind of “misguided budget cuts.” What budget cuts? We cut the rate of increase in the budget, but we’re still above $3.7 trillion annually, which is a third more than in FY2007, with four straight trillion-dollar-plus deficits. We aren’t even in a recession, let alone a depression, at least not as economists (such as Krugman) define the terms. We would have to have two sequential quarters of negative growth to be in a recession. We’ve had several quarters of stagnation during the recovery, but none yet of negative growth. Nor would the cause of negative growth be a reduction in government workers, which as the chart shows, peaked during the early days of the Obama term without prompting any real growth, either.
However, maybe we shouldn’t point out these facts. If the Left wants to argue that Obama has led us into a depression, far be it from me to dissuade them.