News Where are the jobs? Perhaps they exist.

[airborne18]

Part of the problem was the size of the Stimulus - didn't anyone in the Administration see the movie "Brewster's Millions"(?) - it's hard to spend large sums of money - the whole notion that nearly $1 trillion of projects could be "shovel ready" is nonsense.

That criticism aside, I agree that the spending targeted the wrong ENDS of the economy. First the banks, auto industry and unions were bailed out (we won't even discuss the damage done to overall confidence in the US when the bond holders were robbed)- then the bottom of the economy via the states.

Completely overlooked was micro, small, and mid-sized businesses - the 2 to 500 employee type businesses. These businesses are the ones that sustain the job market. These businesses aren't operating manufacturing facilities in China, Mexico, or on ships off the coast (garments).

I agree with you on this point. The issue is that we are a service based economy, and that is not easy to stimulate. The one way to really use the money to build jobs, middle income jobs that we are lacking, is to boost defense spending. And that was taken off the table.

The other issue, which I mentioned in another thread, is that they gave consumer incentives. Which actually can prolong a recession if you pull the trigger too early, which they did. That is one of the basic rules of economics that they violated, they plugged in numbers and thought if they did it sooner that it would stop the free fall. It is the physics of economics, you need to let it hit bottom on its own.

The other part of it is that our auto industry, or anyone industry in our economy is large enough to spark a recovery on its own. Building and real estate have been the cornerstone of our economy for most of the last decade. The issue now is that too much equity has been taken away from the middle class, which is the key to the economy.

 

[mheslep]

I can see no other way to explain a graph that shows late 2008 and early 2009 unemployment numbers significantly lower than they really were. Can you? How could they have gotten the historical record wrong?

My read is that only one month of data, Jan 2009, diverges from the 'with/without' graph before the Recovery Act was passed, and that's what, off by .2%?

2. The unemployment numbers were revised upwards by BLS at a later date (I imagine this is verifiable).

Yes could be, they've done so a couple times in the last ~20 months.

Both of these scenarios indicate that Romer & Bernstein had underestimated the rate at which unemployment was growing in late 2008. In fact, if they believed their graph was accurate in at least the historical record, they HAD to have been underestimating the unemployment growth in late 2008.

Again, the graph was released January 2009, and my read of the graph is that it essentially matches the historical record until the ~.2% difference in January.

If the recession was correctly assessed, and the stimulus had no effect, then we wouldn't have seen unemployment greater than 9%. So you must admit that either their assessment was low, or the stimulus bill worsened unemployment to the tune of an additional 1% - that's not an overestimate, it's a sign error!

Seems to me that's entirely possible, in conjunction with other actions by the Congress that would not be included in the model (healthcare).

 

[russ_watters]

Yes Gokul, I agree that the 8% thing was no more or less than a gross misunderstanding of the economic reality at the time. Fast forwarding, I see nothing - including in this thread - that suggests to me that the Obama administration's grasp of economics has improved since then.

It still looks to me like shooting from the hip and pulling economic data and theory out of thin air.

 

[nismaratwork]

Yes Gokul, I agree that the 8% thing was no more or less than a gross misunderstanding of the economic reality at the time. Fast forwarding, I see nothing - including in this thread - that suggests to me that the Obama administration's grasp of economics has improved since then.

It still looks to me like shooting from the hip and pulling economic data and theory out of thin air.

Forgive me for saying so, but that's how it always appears in every administration for the last century at least. It's generally only in hindsight that success or failure becomes apparent, and even then the role that a given administration played in that success or failure is still debated. Isn't this an argument that has no possible means of resolution in this forum, according to the standards of proof that are required?

The more I read and participate in these P&WA threads over this last month or so, the more I find the ones related to recent administrations are mostly just a means to express personal views and preferences (and I include myself in retrospect). Very little in the way of agreement or evidence to change minds ever seems to emerge... you just learn what political leanings the participants have. Surely there can be a higher standard met here, or at least one that can be attempted.

 

[TurtleMeister]

Isn't this an argument that has no possible means of resolution in this forum, according to the standards of proof that are required?

This is a sub forum of the "PF Lounge". I'm not sure, but I don't think the standards are quite as strict here. I enjoy learning the personal views of members and mentors.

 

[nismaratwork]

This is a sub forum of the "PF Lounge". I'm not sure, but I don't think the standards are quite as strict here. I enjoy learning the personal views of members and mentors.

I don't mean that anyone is violating guidelines, and it is good to know where people stand, but at some point it becomes an endless cycle of bickering and not an exchange of new facts or ideas.

 

[TurtleMeister]

but at some point it becomes an endless cycle of bickering and not an exchange of new facts or ideas.

Well, when it reaches that point I guess it's a judgment call for the mentors. But I thought you were referring to "the standards of proof".

 

[nismaratwork]

Well, when it reaches that point I guess it's a judgment call for the mentors. But I thought you were referring to "the standards of proof".

I don't mean that they aren't valid, just that when it comes to economics and the like, it's nearly impossible to NOT find something that meets standards AND agrees with you.

 

[Gokul43201]

Yes Gokul, I agree that the 8% thing was no more or less than a gross misunderstanding of the economic reality at the time. Fast forwarding, I see nothing - including in this thread - that suggests to me that the Obama administration's grasp of economics has improved since then.

It still looks to me like shooting from the hip and pulling economic data and theory out of thin air.

Russ, you realize you are talking about economists who publish highly cited papers in top journals, as though they are a bunch of crackpots and dilettantes, and your own grasp of economics far exceeds theirs?

 

[Gokul43201]

Again, the graph was released January 2009, and my read of the graph is that it essentially matches the historical record until the ~.2% difference in January.

The Romer & Bernstein report estimates unemployment growth at about 1% (of additional unemployment) over 4 to 4.5 months around the end of 2008/beginning of 2009 (from the plot). The reality was that unemployment actually grew by 1% in about 2.5 months during that time (from BLS). That's an underestimate by nearly a factor of 2.

I consider that more than insignificant!

 

[xxChrisxx]

I don't know how to clean sewers.

We would be in pretty bad shape if no one did.

I assume that you are implying that this is a needed skill with no takers?

It's implied that its a ****ty job.

 

[Gokul43201]

...
2. The unemployment numbers were revised upwards by BLS at a later date (I imagine this is verifiable).

Yes could be, they've done so a couple times in the last ~20 months.

Verified, at least in essence (this does not provide the history of the revisions, and which - or how much - of them had been applied at the time the R & B report was being prepared, nor is it an original source): http://norris.blogs.nytimes.com/2009/03/06/will-job-numbers-keep-being-revised-down/

Here are the total job losses reported for recent months, as originally reported and as shown in the latest revisions.

August 2008: Initially 84,000, revised to 175,000

September 2008: Initially 159,000, revised to 321,000

October 2008: Initially 240,000, revised to 380,000

November 2008: Initially 533,000, revised to 597,000

December 2008: Initially 524,000, revised to 681,000

January 2009: Initially 598,000, revised to 655,000

If the recession was correctly assessed, and the stimulus had no effect, then we wouldn't have seen unemployment greater than 9%. So you must admit that either their assessment was low, or the stimulus bill worsened unemployment to the tune of an additional 1% - that's not an overestimate, it's a sign error!

Seems to me that's entirely possible, in conjunction with other actions by the Congress that would not be included in the model (healthcare).

I'm curious to find out what the opinion of the economic community is on this. Are there any professional estimates of the effects of the last 18 months of legislation on unemployment rates?

 

[Gokul43201]

I'm curious to find out what the opinion of the economic community is on this. Are there any professional estimates of the effects of the last 18 months of legislation on unemployment rates?

What I've found with a quick search:

CBO (Feb 2010): ARRA cut unemployment by about 0.8% in 2009, and expected to cut it by over 1% (cumulative) through 2010¹.

A broader statement on the effects of all legislation was made in their previous report²:

Federal fiscal policy supported economic activity in 2009, both through the effects of legislation (especially the American Recovery and Reinvestment Act) and through the effects of the automatic fiscal stabilizers—automatic changes in federal revenues and outlays caused by the ups and downs of business cycles. Fiscal policy will boost output and employment to an even greater extent in 2010, according to CBO’s estimates, but its impact will decline in subsequent years. In addition, increases in tax rates scheduled in current law will begin to restrain economic activity in 2011.

So far, all of this is a very long shot from the assessment that recent legislation has raised unemployment by over a million jobs.

1. http://content.usatoday.com/communi...yment-would-have-topped-11-without-stimulus/1 (and links within)

2. http://www.google.com/url?sa=t&sour...QvJ6l2jXEjOheGDMg&sig2=OwCrYNSWwXRfOLp2eGbBEg (PDF file)

 

[mheslep]

Regarding economists who "publish highly cited papers in top journals", or for that matter scientists and engineers, when the discussion centers on on a paper actually published in a peer reviewed journal it deserves the respect usually garnered here at PF. When such an economist or scientist writes as a political appointee in government, or spouts off in blogs, then they are fair game for public criticism of those in power just like everyone else, as well they should be. Because as Hume said,

“When men are most sure and arrogant they are commonly most mistaken, giving views to passion without that proper deliberation which alone can secure them from the grossest absurdities”,​

not

"When men, excepting of course the highly published and cited, ..."​

 

[Gokul43201]

Regarding economists who "publish highly cited papers in top journals", or for that matter scientists and engineers, when the discussion centers on on a paper actually published in a peer reviewed journal it deserves the respect usually garnered here at PF. When such an economist or scientist writes as a political appointee in government, or spouts off in blogs, then they are fair game for public criticism of those in power just like everyone else, as well they should be. Because as Hume said,

“When men are most sure and arrogant they are commonly most mistaken, giving views to passion without that proper deliberation which alone can secure them from the grossest absurdities”,​

not

"When men, excepting of course the highly published and cited, ..."​

Do you also consider them crackpots and dilettantes? I suspect not.

IMO, saying Romer, Goolsbee, et al have a lousy grasp of economics would be just like saying Scalia is clueless about jurisprudence. And pointing out that the former group consists of highly respected economists with strong publication records is essentially akin to responding that Scalia has a top notch academic and professional background.

PS: You will find no complaints from me for attacking the content of a blog, opinion column, political report, etc. I welcome more of that - heck, it's what I'm virtually begging for. But that's a different deal than simply name-calling, which of course, if fair game too, since it's just someone's opinion.

 

[mheslep]

So do you also consider them crackpots and dilettantes?

No those are your terms, but I'd say in general technical political appointees are capable, as Russ said, of "shooting from the hip and pulling economic data and theory out of thin air" for purposes of political expediency, though that's not how I'd characterize the Romer Bernstein economics forwarded for the stimulus plan. If you ask me what I believe is the most likely human failing here, I'd say a common case of myopia and group think, similar to the mindset of the DoD's WMD pre Iraq people: not fabricated, but they saw there what they wanted to see.

 

[mheslep]

[...]
IMO, saying Romer, Goolsbee, et al have a lousy grasp of economics would be just like saying Scalia is clueless about jurisprudence. And pointing out that the former group consists of highly respected economists with strong publication records is essentially akin to responding that Scalia has a top notch academic and professional background.

To my mind nobody here is saying Romer etc don't have superbly competent backgrounds. But I agree with Hume that everyone, even experts, are subject to the conjuring the "grossest absurdities" without "proper deliberation", especially when adding political pressure to the mix. SCOTUS judges discuss their opinions amongst themselves for deliberation, both publicly (oral argument) and internally, and have then their final opinions attacked, sometimes vehemently, by their similarly qualified peers in print which we can all see. Contrast that with White House econ advisor reports, where there is no 'dissenting opinion' at the bottom.

 

[Gokul43201]

To my mind nobody here is saying Romer etc don't have superbly competent backgrounds.

I don't know what it means to have a competent background. But I've certainly read a post that essentially called them incompetent, and claimed they have a poor grasp of economics (two years ago, as well as now).

Contrast that with White House econ advisor reports, where there is no 'dissenting opinion' at the bottom.

I'm all for dissenting opinions, so long as they are well-reasoned. Let's have some of those instead of dissenting ad hominems.

 

[Gokul43201]

More content-related discussion... from Zandi & Binder, July 2010 - not peer reviewed, far as I'm aware, but it's value is in that it seems to be an independent calculation using (possibly proprietary) modeling tools (from Moody's), and provides another data point (the third one that I've found and cited) in the landscape of estimates.

The U.S. government’s response to the financial crisis and ensuing Great Recession included some of the most aggressive fiscal and monetary policies in history. The response was multifaceted and bipartisan, involving the Federal Reserve, Congress, and two administrations. Yet almost every one of these policy initiatives remain controversial to this day, with critics calling them misguided, ineffective or both. The debate over these policies is crucial because, with the economy still weak, more government support may be needed, as seen recently in both the extension of unemployment benefits and the Fed’s consideration of further easing.

In this paper, we use the Moody’s Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government’s total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.

When we divide these effects into two components—one attributable to the fiscal stimulus and the other attributable to financial-market policies such as the TARP, the bank stress tests and the Fed’s quantitative easing—we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls. These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration. To our knowledge, however, our comprehensive estimates of the effects of the financial-market policies are the first of their kind. We welcome other efforts to estimate these effects.

http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf

 

[mheslep]

More content-related discussion... from Zandi [...]

Sorry, full stop. Zandi's is as near a contra-indicator as I know of in the world of forecasters, despite his status as a go-to for business reporters and the talking head circuit. If Zandi calls for the sun to rise tomorrow I'd short it, not based on who he is, but on his record of economic forecasts.

http://www.ritholtz.com/blog/2010/09/zandi/

Associated Press – Feb. 4 2006

“The pendulum, which had been fully in favor of employers, is swinging back in favor of employees,” said Mark Zandi, chief economist at Moody’s Economy.com.”

Newsday – ProQuest Archiver – Aug 9, 2006

“It’s at least three or four quarters before we see the bottom of the housing market,” Zandi said.

Wire & Staff Reports – Oct 27, 2006

“The housing market correction is in full swing but it probably has another year to go before it bottoms out,” said Mark Zandi, chief economist at Moody’s Economy.com.

Los Angeles Times – Jan 6, 2007

“Mark Zandi, chief economist for Moody’s Economy.com, said jobs and wages were growing too fast for their own good. He warned that higher wages could induce companies to raise prices, which could lead workers to demand higher wages — an inflationary wage-price spiral.”

[Note: The chart below shows 3-mo. Changes in total civilian compensation. It seems not to demonstrate any wage-price spiral:

Marketwatch - March 26, 2007

"Zandi sees a bottom for sales in spring as sellers become more motivated and start cutting prices." [Note: In August 2010, new home sales fell to the lowest level since 1963, when the government began to keep records.

[...]

CNN Money – Sept. 4, 2007
[...]“I don’t think consumer spending will fall unless the job market is contracting. And I’m fundamentally optimistic we won’t see job loss,” Zandi said.”

CNN – Oct 7, 2007

(on the employment numbers)

Well, wasn’t bad. Its certainly a lot better than feared, it suggests that the economy is not going to slide away into recession, but the economy is still not creating a whole lot of jobs, certainly not enough to keep the unemployment rate from rising and it did in the month and I think it will continue to rise as we make our way into next year. “

[...]
CNN – April 25, 2009

“WILLIS: You know what’s interesting though, you know, because all we care about is seems like are housing prices in this country. I spoke with Mark Zandi this week who follows this, frankly, maybe one of the best databases, Zandi says we are at the bottom in the housing Market, so that is at least some good news, here.

Especially see his housing predictions all the way through.

 

[turbo]

In 2005, my wife and I bought this small house in the country and put our big house on the market. It sold in 2006, near the top of the market. Around the same time, I was posting here about fundamental weaknesses in the market, only to get shouted down by neo-cons on this forum. My wife and I voted with our dollars. We are not economists, but we are not stupid enough to listen to the "economist" cheer-leaders for any faction when our own savings and financial security is on the line.

Please realize that when "respected" economists make learned pronouncements, they can leverage entire markets - if enough people believe them. Trust your gut, and you'll out-perform the experts.

 

[Gokul43201]

About this ...

My read is that only one month of data, Jan 2009, diverges from the 'with/without' graph before the Recovery Act was passed, and that's what, off by .2%?

The R-B report does not plot monthly unemployment numbers, it plots average quarterly unemployment numbers. The last data point on the plot before the ARRA effects are expected to come into play (i.e., "with/without" are still coincident) is for Q1 2009 at about 7.5%. However, the real average unemployment for this quarter was 8.2%. That's a difference of 0.7%, which not only provides a significant offset at the starting point, it adds a huge shift in the initial slope (unemployment growth rate) as well.

 

[Gokul43201]

Sorry, full stop. Zandi's is as near a contra-indicator as I know of in the world of forecasters, despite his status as a go-to for business reporters and the talking head circuit. If Zandi calls for the sun to rise tomorrow I'd short it, not based on who he is, but on his record of economic forecasts.

http://www.ritholtz.com/blog/2010/09/zandi/
Especially see his housing predictions all the way through.

I can not agree or disagree with that summary (having not read the details), but in the interest of making progress I'm willing to stipulate that anything co-authored by Zandi is out.

 

[nismaratwork]

Regarding economists who "publish highly cited papers in top journals", or for that matter scientists and engineers, when the discussion centers on on a paper actually published in a peer reviewed journal it deserves the respect usually garnered here at PF. When such an economist or scientist writes as a political appointee in government, or spouts off in blogs, then they are fair game for public criticism of those in power just like everyone else, as well they should be. Because as Hume said,

“When men are most sure and arrogant they are commonly most mistaken, giving views to passion without that proper deliberation which alone can secure them from the grossest absurdities”,​

not

"When men, excepting of course the highly published and cited, ..."​

Well, if I remember correctly some arrogant people might have been Einstein, Dirac (in his odd way), Heisenberg, Rutherford... oh, and pretty much every other brilliant physicist I can name. Who else was arrogant? Hitler, Nixon (re watergate), Clinton (re Lewinski), Henry VIII... Axioms the musing of Hume are not useful in this context because they apply however you wish them to apply.

Gokul: Scalia I would say, has a firm, even brilliant grasp of jurisprudence which he chooses to ignore any time it fails to meet his equally firmly held ideologies. To me, that makes him a very bright and very dangerous man, and a zealot. I say this, not just to slam Scalia, although that's always a treat, but because it's important to note that qualified and brilliant people can CHOOSE to act and say things in the interest of things other than reality or the truth.

In the case of economics and politics, that seems to be the USUAL, rather than the departure from the norm... and why this debate can go on until we're all dead without any side gaining an upper hand. There will always be evidence provided by qualified individuals acting dishonestly, or in accordance with their own interests and/or prejudices.

Is it any wonder these debates go NOWHERE?

 

[Gokul43201]

Is it any wonder these debates go NOWHERE?

I don't think this debate has gone nowhere.

On the one side (though this is somewhat removed from the OP), there are claims that are predicated upon the requirement that ARRA (and other recent legislation) have killed over a million jobs. There have as yet been no supporting references provided for this, but perhaps some will be found soon. There have, however, been a couple of citations to the contrary (CEA and CBO quarterly reports), that say that the ARRA and other legislation have added anywhere from 1 to 3 million jobs.

On the other side is the proposition that the original jobs projection of 8% max unemployment was due in large part to bad employment data at the time of the report. This idea has been argued through comparisons of revised BLS stats with numbers originally used in the report, as well as through citations showing the magnitude of revisions to BLS data. The only (partial) counter-argument has been responded to.

 

[nismaratwork]

I don't think this debate has gone nowhere.

On the one side (though this is somewhat removed from the OP), there are claims that are predicated upon the requirement that ARRA (and other recent legislation) have killed over a million jobs. There have as yet been no supporting references provided for this, but perhaps some will be found soon. There have, however, been a couple of citations to the contrary (CEA and CBO quarterly reports), that say that the ARRA and other legislation have added anywhere from 1 to 3 million jobs.

On the other side is the proposition that the original jobs projection of 8% max unemployment was due in large part to bad employment data at the time of the report. This idea has been argued through comparisons of revised BLS stats with numbers originally used in the report, as well as through citations showing the magnitude of revisions to BLS data. The only (partial) counter-argument has been responded to.

With the exception of the assertion that this has gone anywhere, yes I think you make good points. The response from you um... loyal opposition however is likely to continue what you've now characterized as baseless assertions. I never claimed that debate changes reality, but the debate is static... only those who share your views of this, such as myself, are swayed.

 

[Gokul43201]

I myself hold no unshakeable views on this subject - much of this debate is about stuff I'm just looking into for the first time - and I'm ready to be swayed. So far, I think I've understood the origins of some of the big problems in the Romer-Bernstein report. That's new, and it's good.

Moreover, I've only demonstrated (I hope) that some previous assertions are as yet unsupported. I do not yet hold that they are necessarily baseless.

 

[nismaratwork]

I myself hold no unshakeable views on this subject - much of this debate is about stuff I'm just looking into for the first time - and am ready to be swayed.

Moreover, I've only demonstrated (I hope) that some previous assertions are as yet unsupported. I do not yet hold that they are necessarily baseless.

I'm sorry, but I've read too much of the P&WA backlog of threads (many locked), to be so optimistic about this one. I don't hold with the 12 step program's definition of insahnity, but this seems a lot like taking the same actions over and over, and expecting a different outcome. What I've learned in my short time here, is that agendas are carried even by extremely bright people, and those agendas are often supported with rhetoric rather than reason or references. (alliteration... ba zing!).

 

[Gokul43201]

Here's something you could learn. Slow down - give a person a few minutes after they've initially posted a message, to sneak in any grammar and typo corrections, afterthoughts or revisions.

 

[nismaratwork]

Here's something you could learn. Slow down - give a person a few minutes after they've initially posted a message, to sneak in any grammar and typo corrections, afterthoughts or revisions.

Good advice, and sometimes good advice is taken and other times the mood is just not there. I'll take that time you recommend and see how this debate plays out over the next few pages. Let's see just how this pans out, OK?