Pethokoukis

A big version of the infamous Romer-Bernstein jobs chart, updated for September 2012

Again, by popular demand, here is an updated version of the January 2009 jobs forecast by Obama administration economists Jared Bernstein and Christina Romer. I have taken the super-optimistic chart they produced and added the actual, gloomy employment results.

Click on the chart, and you will get a bigger version. Click on that one, and you will get an even bigger version. Or you can just click here for the maximum version.

35 thoughts on “A big version of the infamous Romer-Bernstein jobs chart, updated for September 2012

  1. Here’s the question. If you KNOW you’re headed for a serious recession, how do you accurately gauge it and calibrate right right size response?

    It appears to me that we’re castigating people for not accurately predicting ahead of time just how deep the recession would be and what size, type response to use.

    • The recession ended a few quarters into Obama’s administration (look it up). What has happened since then is a decline in the rate of growth of GDP.

      Libs cannot do math.

      So in plain English, we overcame the recession, started to grow, then we got Obama’s policies in full force. We then head back downwards to recession.

      • Affirmative action does not require arithmetic. The trick is that when numbers enter into the debate, put your head down and stare and frown at the floor–pretend that you are an empty chair.

        If you want an A in arithmetic, just show up.

      • That’s a great chart that shows that we are losing momentum and steam–our growth is slowing. And our peak GDP growth was only a very moribund 3.9%.

        As to that latter point, if you go back and look at history, then you will normally find a series of consecutive quarters that grew at 6-9% versus out recent peak growth of only 3.9%. That’s one reason why Reagan’s robust rebound gave us 5.7% GDP growth at this comparable point in the recovery versus the messiah’s moribund 2.2% that most recently slid to only 1.3% in Q2.

        That’s what a 0% ff rate and $5+ trillion bought us taxpayers. That’s what the stimulus, 3 QEs and operation twist produced–a U-6 stuck around 14.7%, 47 million food stamps, record mortgage foreclosures and bankruptcies, about 25 million folks un or under employed (part timers) while millions of others are not even bothering to look.

        This is a Solyndra/Chevy Volt/ windmill/”shovel ready” economy–all hoopla and hot air with no growth, lots of shovels but no jobs, plunging household incomes and burgeoning debts. No wonder why the messiah turned himself into an empty chair during the debate that was witnessed by 65 million–that kind of guilty failure NEVER makes eye contact and always looks at the floor.

  2. “Experts” either know what they are doing or they do not know what they are doing.

    Charitably, your argument is that they don’t know what they are doing. Given that, why should we believe that burning 1 Trillion on cronies and dubious solar projects (I repeat myself) is an appropriate course of action.

  3. Not only that, Jim’s crystal ball hasn’t been (cough) all that accurate either.

    The fact that he’s up on a Sunday posting this drivel means he still needs to be narcotized from Friday’s report.

    Romney will lose, Jim. And the economy will continue to improve.

  4. Planck = “People with OCD feel the need to perform routines and rituals over and over. The thoughts and rituals associated with OCD cause distress and get in the way of daily life.
    The frequent upsetting thoughts are called obsessions. To try to control them, a person will feel an overwhelming urge to repeat certain rituals or behaviors called compulsions. People with OCD can’t control these obsessions and compulsions.
    For many people, OCD starts during childhood or the teen years. Most people are diagnosed by about age 19. Symptoms of OCD may come and go and be better or worse at different times.”

  5. THE FATAL FLAW:

    When you peddle an agenda that assumes a 1.5 multiplier and that multiplier turns out to less than 0.5 if you include transfer payments, your agenda is doomed and so is your reputation. That’s why Christina is back teaching the impossible at Berkley and non-economist Bernstein appears only on CNN.

    And is based on the false premise that if you take money away from the productive and efficient private sector and redistribute it to the inefficient public sector, then what could never be more than 1 suddenly becomes 1.5. A fundamental physical Law of the Universe gets violated–for 1 to become more than only 1, you would have to spend that redistributed dollar more than once.

    • Romer, kind of an interesting case. When it was announced that “Romer” was getting a big job in Obamaville, I said, “great”. At first, I thought they were hiring Paul Romer.

      Paul Romer, at one time, was one of the most influential economists to me in my work. I am not, and proud of it, an economist, but Paul Romer promoted his theory that missing in the productivity function was proper respect for the use of information. His thesis, in part, is that the vast improvements in information technology had to be understood to account for productivity. Look around for his thesis. I have a hard copy but I bet you can find it on the web.

      So I looked up this “other” Romer and it did not seem that what she was preaching, B.O., is what she was preaching when preaching the stimulus. Some of her work (I do not recall the details) were actually quite skeptical of massive neo-Keynesian injections.

      So I concluded she was an idiot or a sellout. I never bothered to resolve that question.

      BTW, I have a relative who is a student at UC Berkeley now and while there are radical leftists (most are not students), libertarian ideas are enormously popular.

  6. Jimmy P won’t have a job after November 6. Romney wins and there is no need for heat over light. Obama wins and there is no need for heat over light for 3 years.

    Now on to the the Romer/Bernstein chart.

    Romney/Bernstein are preparing their chart on November 7, 2008, the day after the election, and making adjustments through January 20, 2009 as the data rolls in and before the ARRA stimpack is rolled out in early February, 2009.

    The BEA says that Q3 2008 GDP declined by 0.3% on October 28, 0.5% on November 25 and 0.5% on December 23.

    The BEA says that Q4 2008 GDP declined by 3.8% on January 28, 2009.

    The reality is that BEA subsequent revisions say that GDP declined by 3.7% in Q3 2008 and 8.9% in Q4 2008. Talk about getting screwed by data.

    We didn’t hear John Francis “Jack” Welch, Jr tweeting about “Chicago-style data” in late 2008 or early 2009, did we?

  7. The problem with the Romer/Bernstein analysis is it had some pretty unrealistic growth assumptions built in. There was no way the economy was going to grow at their estimated pace, considering how deep the recession was.

    There is also the assumption that the stimulus money would be used correctly and not wasted. Well, this is just willful blindness. The problem with stimulus, and why it is doomed to fail, is the fact money will get wasted. It’s just human nature: you are never as careful with other people’s money as you are with your own. This can be seen in the rediclious things stimulus money was spent on: nearly bankrupt solar companies, unnecessary construction projects, etc. People got rich off the stimulus, and it wasn’t the people it was intended for.

    Stimulus is also doomed to fail simply because of the way it is set up. Stimulus needs to get into the economy quickly, which means government doesn’t have time to thoroughly vet where the money goes. All too often, the money goes to contractors already doing business with the government. They have no need for the money, yet receive it anyway. We have seen this in every stimulus in every country since the Great Depression.

    This is why tax cuts are the proven better method at stimulating the economy: when people get to keep more of their own money, they get to spend it on things they value. That sends proper messages about how the resources in the economy should be allocated. With government directed spending, spending is wherever the government wants to spend it (usually in pet projects), this leads to a misallocation of resources, which subsequently perpetuates the recession and slows the recovery.

  8. Here’s a SHOVEL READY cut and paste to which I beat Max Einstein:

    When President Barack Obama signed his economic stimulus legislation on Feb. 17, 2009, he said that one impact of the act would be to create jobs for 400,000 people building and rebuilding the nation’s infrastructure.

    But despite a price tag that the Congressional Budget Office now says was $833 billion, the economic stimulus of February 2009 did not create 400,000 new construction jobs.

    In fact, according to the Bureau of Labor Statistics there are now 1,035,000 fewer construction jobs in the United States than there were in January 2009, when Obama was inaugurated, and 925,000 less than in February 2009 when Obama signed his stimulus act.

    More proof that the multiplier was not 1.5x as it was peddled to America…and that it was really under 0.5X.

    The multiplier really was a divisor. Christina and Jared sold a bill of goods to the messiah and this incompetent product of affirmative action bought into their impossible hoax hook, line and sinker.

    • Just to update, as of September’s preliminarily jobs report, the BLS reports there are now 1.2 million fewer construction jobs now than in February 2009.

      The stimulus was also meant to protect jobs for teachers and other state & local government workers. Education at the state and local level is down some 10% (205,500 jobs) since Feb 2009.

      No matter what statistic you choose to use, the stimulus was a major failure.

      • “No matter what statistic you choose to use, the stimulus was a major failure.”

        The CBO disagrees emphatically. Aside from that, a good deal of stimulus funds were used to plug local budget gaps that came from cratered tax receipts, thanks to supply side voodoo.

        • Einstein….what’s the CBO saying about our U-6 forever treading water around 14.7?

          Does the CBO have any answers for those folks? Or are the messiah’s food stamps enough to keep them happy?

        • The CBO disagrees emphatically.

          Correction, the CBO assumes they disagree. They start their analysis with the assumption that the stimulus created jobs. That is hardly scientific.

          Aside from that, a good deal of stimulus funds were used to plug local budget gaps that came from cratered tax receipts, thanks to supply side voodoo.

          Sidestepping the obvious logical fallacy here, the stimulus even failed here as evidenced by the municipal bankruptcies of Harrisburg, the entire state of California, Central Falls, Jefferson County, Boise, and some 14 others.

          • Sir, it is amazing how much disinformation one can cram into so small a space as in your reply. And it actually takes WORK to do it.

            This statement is beyond asinine: “Correction, the CBO assumes they disagree. They start their analysis with the assumption that the stimulus created jobs. That is hardly scientific.”

            The only people I know who start an “analysis” with an “assumption”- or more accurately a “presumption”- would be the people who write the articles on this site. The CBO uses no such methodology, and no one would dare call it an “analysis.”

            Secondly, the CBO has provided broad estimates of the stimulus’ effect, and one reason for that is that it is difficult to gauge or quantify precisely. However, if I were in charge of an economy that was sucking up everything in its path like a black hole in a deflationary death spiral, I would would be providing as much liquidity, stimulus, ass kicks, as I could. So even if you think it wasn’t terribly effective, it was still the right thing to do. Doing nothing would have meant you and your family foraging for food in the forest.

            You then state:
            ” Sidestepping the obvious logical fallacy here, the stimulus even failed here as evidenced by the municipal bankruptcies of Harrisburg, the entire state of California, Central Falls, Jefferson County, Boise, and some 14 others.”

            As a municipal bond professional myself, I will, once again, spare you the abject ridicule I could spend hours on for the foolishness of that statement, especially as to the Harrisburg situation, which apparently, you know absolutely NOTHING about. I’m in a generous mood, so I will be polite, and leave you to research this yourself, so you may embarass yourself privately.

          • Forgot to add this from Romney when he was governor. Let me know if you find any correlation here:

          • The CBO uses no such methodology, and no one would dare call it an “analysis.”

            Yes they do. To both statements.

            As a municipal bond professional myself…

            Previously you said you were a bank loan originator. Which is it? Are you a bank loan officer or a municipal bond professional? You seem to change your story to suit your needs.

          • Regardless, I do not understand your point about Harrisburg. Its debt problems are the result of the same old story: green energy guarantees (some $310 million in debt to an incinerator), unfunded pensions, etc. Stimulus money was meant to protect these things and help float states and municipalities. It hasn’t done so.

            So, I don;t understand your point. You seem to have no problem embarrassing yourself publicly, so why spare me? Enlighten me with your wisdom.

          • “Correction, the CBO assumes they disagree. They start their analysis with the assumption that the stimulus created jobs. That is hardly scientific.”

            Stop it, already. Your assertion is asinine. From the report:

            CBO’s Modeling Approach

            CBO used EVIDENCE from models and historical relationships to determine estimated “multipliers” for each of several categories of spending and tax provisions in ARRA, as shown in Table 2. Each multiplier represents
            the estimated direct and indirect effects on the nation’s
            output of a dollar’s worth of a given policy. Therefore, a
            provision’s multiplier can be applied to the budgetary cost
            of that provision to estimate its overall impact on output.

            “Regardless, I do not understand your point about Harrisburg. Its debt problems are the result of the same old story: green energy guarantees (some $310 million in debt to an incinerator), unfunded pensions, etc. Stimulus money was meant to protect these things and help float states and municipalities. It hasn’t done so.”

            Wrong again, particularly as it refers to Harrisburg which was a cooked deal from the start. More preposterous is that the stimulus was used or intended for municipal debt service. That is utterly ridiculous. For most municipalities, debt service accounts for only 3% of their budgets, and your statement reflects gross ignorance on this matter. Againm funding for debt service wasn’t even an afterthought in this matter, but you decided to make the statement anyway. I really don’t wish to to hammer you, but if you’re going to post, do it on a subject you know something about, because the REAL offense is you’re not thinking for yourself.

            I was a mortgage professional for over 8 years, and had a correspondent relationship with over 30 lenders covering Fannie/Freddie, VA, FHA, No Income, Sub Prime, Light commercial, and construction to permanent loans. I later had a brief, but very productive stint in commercial credit reporting, and jumped at an opportunity in the municipal bond field. Today, if it generates income on a regular basis, I’m into it.

            I’m not changing any story. I use my professional experience, which I earned, to make these judgments.

            And YOU. Sir?

          • CBO used EVIDENCE from models

            Case and point.

            Each multiplier represents
            the estimated direct and indirect effects on the nation’s output of a dollar’s worth of a given policy. Therefore, a provision’s multiplier can be applied to the budgetary cost of that provision to estimate its overall impact on output.

            Case and point.

            These things are an estimate based upon models, not facts. That is not scientific research. That is confirming your basis.

            Wrong again, particularly as it refers to Harrisburg which was a cooked deal from the start.

            You keep saying I am wrong, but you are not saying why. If I cannot trust the documents from the bankruptcy filing as the reasons why Harrisburg was in debt, then what can I trust.

            More preposterous is that the stimulus was used or intended for municipal debt service.

            From President Obama in 2008: Given that gloomy forecast [by economic advisers], Obama last week presented congressional Democrats with a proposal to dedicate $675 billion to $775 billion over the next two years to middle-class tax cuts, aid to strapped governments and investments in domestic priorities such as infrastructure, health-care technology and education — a package designed to jolt the economy while deterring further layoffs and putting people back to work.

            I was a mortgage professional for over 8 years, and had a correspondent relationship with over 30 lenders covering Fannie/Freddie, VA, FHA, No Income, Sub Prime, Light commercial, and construction to permanent loans. I later had a brief, but very productive stint in commercial credit reporting, and jumped at an opportunity in the municipal bond field. Today, if it generates income on a regular basis, I’m into it.

            My apologies, I had misunderstood what you had said when we first met.

            As for me, I am an economist.

            One thing I do want to ask your opinion on, since you are an expert in the municipal bond field: what is your opinion on muni bond index funds? Good place to put your money?

          • “CBO used EVIDENCE from models. Case and point”

            No sir, you didn’t say that. You ACCUSED the CBO of a predetermined bias from the outset, which is a different thing. OF COURSE, they used models, and we probably won’t know more precise numbers for some time. But one thing is clear- cops stayed on the job, many projects – including a couple Paul Ryan got done now that he’s on an apology tour for voting for the Act- were either finished, or started. Localities would have just plain run out of money to finish capital projects they were in the middle of. Localities- wisely- were given wide discretion in many areas as to how to deploy their funds. The Build America Bond Act was also instrumental in providing needed funding for yes- “shovel ready” projects.

            “The capital projects these bonds fund include work on public buildings, courthouses, schools, transportation infrastructure, government hospitals, public safety facilities and equipment, water and sewer projects, environmental projects, energy projects, government housing projects and public utilities”

            Naturally, when I told you that none of the stimulus funding went to municipal debt service, you deflected with something completely unrelated.

            As far as Harrisburg was concerned, these idiots issued fresh bonds on their OLDER incinerator which they KNEW only had 10 years of life left in it. Unfortunately, they had no plan or funding to retire the debt on the old plant, and simply went ahead with construction of the newer, larger and more efficient one.

            “The state also played a role. The forensic audit of the incinerator that came out earlier this year criticized the Department of Community and Economic Development for certifying Harrisburg’s debt as “self-liquidating,” meaning the incinerator should have been able to pay for itself.”

            One day someone will write a good book about the incompetence of these fellows, but again, the tale has precisely NOTHING to do with ARRA.

            I do not give advice on line, and recommendations are only made based on the suitability of the client’s needs, risk tolerance, tax status, assets and goals.

          • OF COURSE, they used models, and we probably won’t know more precise numbers for some time.

            But their methodology is based off assumptions. Using these models, they develop a range of multipliers. They then use this range to come up with job creation estimates. So, they begin with the assumption that their multipliers are correct, and then calculate their job creation numbers from that.

            Any analysis that doesn’t leave room for a null hypothesis is quite worthless. That is one of the reasons why I do not like the CBO numbers. They do not allow for the possibility that they are wrong. What kind of research is that?

            It is also a nice little rhetorical trick that every politician, right, left, or in the middle, likes to use: “If I didn’t do anything, it would have been worse.” There is no empirical way to prove this statement. Imagine, if you will, that Boston Mayor Thomas Menino said “The Red Sox’ bad season this year was due to their old ballpark. I will build them a new one and they will get more wins because of it.” Boston builds its team a state-of-the-art stadium, and the next year the Red Sox win the World Series. The Mayor then says “If it weren’t for this new stadium I built, the Sox wouldn’t have won!” Did Mayor Menino win the World Series because of the new stadium? Of course not. That situation may have occurred in the old ballpark. Maybe the Sox actually lost more games than they would have if they still played in the old ballpark. It is quite impossible to know for sure. Which also means it is impossible to disprove. But that is no reason to take something at face value. Does God exist because you cannot prove He doesn’t exist? Of course not. This is why, from a statistical perspective, I hate statements like “If we didn’t do something, it would have been worse!” There is no reason to believe that statement and no facts to back it up. The only thing we can know is there was one luck son of a gun who happened to be in the right place at the right time and is now claiming credit.

            This is how the “government solved the crisis” argument falls apart. The first thing that needs to be proven is that there is correlation, not causation. Well, the CBO says X number of jobs were created and Y were saved, meaning X+Y jobs are directly the cause of the government. Then we run into the problem “Where did the CBO get their estimates?” Their estimates come from the models they built. And where do the models come from? Assumptions based on theory. So, the theoretical models, which are designed to show government spending creates jobs, show that the government spending created jobs. Then, the whole argument crumbles like hamburg in a frying pan.

            To be fair, President Obama does deserve some credit for jobs created. Specifically, he gets credit for the 42,000 Federal Government jobs created since February 2009. Those are the only jobs he has any control over and thus deserves credit for. Similarly, the private sector deserves credit for the 3.5 million jobs created over that same time frame.

            All a politician is is a lucky person who is in the right place at the right time: Obama is lucky (or unlucky, depending on your POV); GW Bush was lucky (or unlucky, depending on your timeline); Clinton was lucky; GHW Bush was unlucky; Reagan was lucky; Carter was unlucky, and so forth.

            Anyway, to bring this full circle (I got a little long-winded there, I apologize), the CBO’s numbers are a basis for what the politicians think. The media love them, but few economists use their numbers seriously. Different economists have different multipliers for government spending, which means you can have estimates ranging from .5-5.0 (although most of them are in the .5-2 range).

            Where the CBO excels is in budget projections. Their numbers are a really good indicator of what to expect going forward. Their analysis of past events, however, leaves something to be desired.

          • Look, the point I am trying to make here isn’t a controversial one: these numbers are based on theory and thus deserve a grain of salt. It is the trumpeting of these numbers as fact that is grossly misleading.

          • I’ll be brief.

            I am disappointed that you personally find the CBO’s methodology wanting. It is indeed a pity so few others do. However, if you ARE an economist, then you know modeling is the stuff of the profession. They can’t possibly count every single job that was created by ARRA, anymore than the BLS “counts” every single person who landed a job every month. Suffice it to say, it what was PRECISELY what the economy needed at that moment, and with hindsight, it probably SHOULD have been made bigger. You don’t contract spending during a contraction, if you don’t get that, you’re no economist.

            I remember getting an e-mail at my desk in late 2008 from RBC. It said NOT ONE commercial real estate closing had taken place in Manhattan from August until the end of the year. That’s how effed up things were. Who the hell are you to second guess anyone?

            Secondly, the Federal government has NOT gained 42,000 employees, and as of April 2012, stands at about 21,000 over the month Obama took office. This is out of 3.1 million employees. I guess you can afford to go on vacation now.

            Wrong on everything….

        • Exactly. It went into a massive transfer of debt from state and local governments to the federal government. Not really the same thing as “stimulative” infrastructure “investment.”

  9. I would like to see analysis from when Bush became a lame-duck and at the complete mercy of the democrat controlled House and Senate, even to the point of being told Hank Paulson was the only man they would confirm for Treasury Secretary. Break things down to a strong President who can set agenda, and a weak President who is at the mercy of the opposition party. I contend this mess got rolling with the 2006 election putting Obama in the democratic controlled senate and the mafia queen Polosi in charge of the house.

  10. The correct answer is that anyone making a projection in January 2009 and expecting it to be accurate wouldn’t make the person smart- just bloody lucky.

    While Ms. Romer has publically expressed that her “one regret” about her service was her optimistic call on the unemployment rate, these things rarely work out. Who would dream, in 2002, that a decade hence we would be where we are now?

    Some didn’t get it right the week after Lehman fell. Here’s one of Jimmy’s smartest friends:

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