Sunday, August 5, 2012

Stay the course, ignore the hole in the boat

Dan Mitchell at Cato took the opportunity the other day--following another mediocre jobs report and an increase in unemployment--to recycle the classic chart showing the Obama Administration's projected unemployment levels following the Stimulus Bill and the actual unemployment numbers:


Oddly enough, the slope of the curve is not that far off--just much, much higher--until the last several months, where it appears a new trend of increasing unemployment is developing (look at the trend line from 2007 to the second quarter of 2008). It's a powerful statement in graphic form. Indeed, Mitchell  suggests Romney would be well-served to use it as much as possible:
I never watch TV, so I’m not in a position to know for sure, but I haven’t seen any articles indicating that the Romney campaign is using this data in commercials to criticize Obama. That seems like a missed opportunity.
He makes a fair point, especially when the Democrats in power seem to think the above chart is a positive. Wasserman-Schultz makes this exact case on "This Week with George Stephanopoulos" (my boldface):
That's the choice we have got in this election. Do we want to continue moving in the direction that President Obama has taken? 29 straight months of job growth in the private sector, a president who wants a balanced approach to deficit reduction. Asked folks to pay a little bit more who can, so that we can make sure we can make those investments in education and the economy. 
We're all in this together. This election should not be about defeating Barack Obama. It should be about getting the economy turned around, and that's what Barack Obama is committed to.
Look at the chart again and the "direction" Obama is taking the country, with regard to jobs. As I've noted before, job growth or job creation is "quite possibly the dumbest metric to ever enter discussions on the economy." Aside from the number of "created" jobs being mostly a guesstimate and subject to manipulation via "corrections," it's terribly misleading, since somewhere between 100,000 jobs and 150,000 jobs are needed each month, just to keep pace with population growth.

The unemployment rate is also less-than-trustworthy, it is true, since the BLS likes to arbitrarily move huge numbers of people out of the job market, thus decreasing the labor force participation rate and lowering the unemployment rate, even though the number of employed people may have--in reality--decreased.

But flaws and all, these are the metrics we have. So again, let's look at the chart. Even with fudged rates, does the chart show us a direction we really wish to follow? By my calculations, it will be well past 2020 before we come close to reaching the unemployment rate of 2007 again. If Obama wins reelection and we continue in this direction for four more years--getting us to 2016--will we need to elect a designated successor to keep us on the right track until 2020? Maybe Wasserman-Schultz will take the helm, since she has all of the answers (though doesn't seem to understand the questions). Won't that be special?

The point is, Wasserman-Schultz is unknowingly making the case for exactly why Obama needs to go: his policies--and those of the Democrats in Congress--are bad news when it comes to economic growth. What growth there has been is occurring in spite of these policies, not because of them. The "direction that President Obama has taken" sucks eggs. It's the direction of minimal growth, an anemic--if not non-existent--recovery, and a larger class of  the permanently unemployed. As Mitchell so succinctly puts it in his conclusion:
In other words, our economic policy should be more like Hong Kong and Singapore, but the Obama administration has been making us more like France.
Yes, Romney should use the above chart in his campaign ads. But more importantly, he should run with Wasserman-Schultz's question and answer, because no one in their right mind would want to keep going in this direction, if they could actually see what lies ahead.

Cheers, all.

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