GOP Spins Latest Jobs Report -- Why Their Favorite Anti-Stimulus Chart is Bogus
The new jobs report shows that the economy is improving. Republicans, of course, do not enjoy that fact, and are denying that the stimulus worked at all. Once again, the data does not support their argument.
While the unemployment rate is higher than the White House predicted it would be back in 2009, it does not mean that the stimulus failed. What it does mean is that the crisis was much worse than the administration realized, and that it escalated faster than anyone could have predicted.
Over at Business Insider, Joe Weisenthal explains that White House economic advisors Christina Romer and Jared Bernstein released the GOP's favorite chart (below) on January 10, 2009, "right in the throes of the recession,"when "things were weakening much faster than anyone could possibly realize in real time."
Note: That green line shows how many jobs Obama's stimulus saved.
The important thing to consider is that the Bureau of Economic Analysis said the BEA's own initial GDP estimate for the fourth quarter of 2008 -- immediately following the financial crisis's onset -- was 3.8 % annual decrease. A second estimate predicted a 6.2 % decrease. Now, the most recent estimate is now much higher, at 8.9%.
Romer was working off very imperfect data. If even the BEA didn't realize how bad the economy was until July 2011 -- over two years after the original stimulus -- then Romer could have had no clue.
And this matters a lot. If stimulus works by filling the demand "hole", then it's a really big deal that the hole was nearly three times as big as anyone thought at the time.
So this endlessly hammering Romer and The White House over this chart makes for good politics, but it is misleading. It doesn't show that the stimulus failed, it shows that nobody realized how bad things were at the time, and perhaps it even unwittingly makes the case that the problem was that the stimulus wasn't nearly big enough.
Read the full post here.