Brad DeLong's Semi-Daily Journal (2004)

This is what it has come to: the Bush administration should use what we all concede to be the wrong information, rather than attempt to use the right information.

Except if we decide otherwise, I suppose.

That is what this dispute is about, isn't it? No one really believes that the original dating of the recession was correct, so why, exactly, should the Bush administration continue to use it?

No. This is about revisionism. We may as well be in the old Soviet Union. Why this fight now, though? Between the election, the legal fight and the inaugural, Cheney and his boys were pretty aggressive in claiming that a downturn was either here or coming. They were chided for talking down the economy. This was all a pretext for selling their tax cut elixir and perpetuating their frauds. But why would this matter now? They got all their tax cuts. Is because they want to say during this election, we did this to kickstart the economy, not because we are ideological ogres? Why does this matter? What is Mankiw's endgame?

I live in Silicon Valley, and the tech stock market peaked and started diving in March of 2000. I suppose economists can massage numbers to put the "official" start of the recession pretty much anywhere they want, but that's where it started around here.

Does anyone really still hold to the belief that anything done by this Administration isn't heavily, incredibly politicized?

Think of the data that comes out of this administration. The job reports that somehow come out looking good, then get revised downwards when people aren't watching. The exclusion of millions of unemployed from the total unemployment percentages. The Budget numbers. The deficit numbers. The tax cut packages. If I'd sat here and made a conscious decisision to not accept any of the economic data put out by this admin (the dollar will remain strong!) I'd have made a fortune.

They lost my trust far too long ago for htis to surprise me. If this was a change that didn't so perfectly fit into their election plans, maybe they'd convince me. But given all the other examples, I just can't buy their story.

http://balta.blogspot.com

By the way, Bush's first tax cut wasn't passed until June of 2001. Even if the recession began in February or March of 2001, about a month or so after he took office, and before he even had a cabinet properly assembled, what specific Bush policy or action can you blame the recession on?

The expectation that the Bush administration would pass a massive tax cut, based on BS projections, tilted as much towards the rich as possible.

Markets are presumably capable of taking likely future events into account, IMHO.

In response to Thomas, it's apparent that this issue is fundamentally about the integrity of the process. If the NBER panel decides to adjust the official dates of the recession, fine. That is their role and how the process is supposed to work. The reason for this structure is to avoid political manipulation of offical economic data. What the administration has done should serve as an object lesson in why this process exists.

I am not aware of anyone who asserts that the Bush administration's policies started the recession. The debate has been over the effectiveness of their economic policies in fostering a recovery and supporting the long term prosperity of our nation.

So, the question at hand relates to credibility and respect for process. This should matter to an administration that has taken on the mantle of "restoring honor to the White House."

People are not blaming Bush for recession in 2001. It is his pathetic response to the economic downturn and loss of jobs that is being criticized. Mr. Bush failed to implement the time tested strategies that ensure job recovery after a downturn. Instead, he pursued the trickle down economic policies that have failed in the past. The economic situation in 2001 was not the fault of Mr. Bush. However, he has had 4 years to play the hand he was dealt. He has not adequately addressed the job situation. It is not clear that he even understands the problem. It is clear by his policies and statements that he doesn't grasp the solution. He bears a large responsibility for the lack of jobs in 2004. The voters should hold him accountable.

Tbrosz, the stock market, tech or otherwise, is NOT the determinant of recession, though it is one of the lesser factors. The primary factor is GDP output. Two successive quarters of negative GDP = recession.

It's not for the Administration to determine this. It is the job of NBER, and has been through both R & D administrations, for decades.

>>That's important, because the recessions of 1981-82 and 1990-91 both started in or after the month that employment fell.

In the scheme of things, this is something I'm not losing sleep over. If you look at the two recessions Mandel cited, real GDP turned down concurrently with employment (1980) or after employment (1990).

This time, we did have slightly negative real GDP growth in the third quarter of 2000, according to the BEA revisions, although the economy rebounded in the fourth before contracting again in the first three quarters of 2001. Maybe the recession _did_ start sometime in the second half of 2000.

There's always politics in the ERP; I don't think Gene Sperling read them all cover-to-cover during the Clinton administration because of his great interest in telecom regulatory policy. The NBER will decide what the NBER will decide, and they're not going to let the ERP sway them. Save your fire for more important issues, like how the administration seems intent on gleefully trashing the nation's long-run fiscal health.

TCS, all I can say is, read the report. It makes clear that NBER has set a date, and that NBER has now, in light of new information (revisions to the data), indicated that the date will be revised backward in time. The CEA's report gives that information clearly. It doesn't say that the date it offers is the only one, but it gives reasons for thinking that the date has some relationship to what NBER will ultimately establish.

The other approach would be for the CEA to use a date that everyone agrees is wrong, just because the NBER hasn't yet decided what's right. That just doesn't make sense.

Simple suggestion - have a commission examine this and report their findings in early 2005. If it works for the Iraq WMD Intel, it certainly works for this.

Thomas,

My opinion is that the CEA, to use a football analogy, was encroaching on the neutral zone. To the extent that the report said that "revisions since the NBER made its decision for the most recent recession strongly suggest that the business cycle peak was before March 2001," I have no complaint. To say that because the median peak for the measures (excepting monthly GDP which wasn't available yet) was October 2000 and that the ERP would therefore treat the recession as beginning in 4Q 2000 is where I have the complaint. Lacking the monthly GDP, it's premature. If 2004 weren't an election year, I don't think they would have had a strong enough incentive to anticipate the NBER panel so my belief is that this is a political decision, although one that may be proven as sound economic analysis in the end. However, this is the camel's nose. Once you start down this road, perhaps the CEA will need fewer and fewer indicators as justification for their revisions without waiting on the NBER.

It is certainly the case that the NBER panel is looking at the dates in light of the new data, but every report I have seen notes that the result could be no change, a revision to Feb or Jan, or revisions back into 2000. It would be incongruous if the NBER ultimately redates the onset of the recession to a date different than the CEA, wouldn't you agree?

Bill Clinton brought on the recession. Of course of course!

Bush I: War, Recession, Deficits
Clinton: Peace, Prosperity, Surplus
Bush II: War, Recession, Deficits

what does it matter when recession started? because insofar as the recession was predictable or perhaps even underway when the 2001 tax cuts were passed, then those who pushed for those cuts are responsible for their inefficacy in ameliorating the effects of the downturn. It will be recalled that the Administration came into office 'poor-mouthing' the economy, and the evidence now suggests that the Administration was right in this perception; but their responsibility is for the failure now three years later to have generated a turnaround in job creation and national income per capita growth, to have helped to stimulate a corporate profits turnaround by policies that have traded longterm macroeconomic beneficial conditions for shortterm gains too small to offset the loss of longterm benefits, and to have facilitated a very large transfer of income and wealth toward those least in need of such extra advantages, while burdening everyone else with numerous additional disadvantages. The fact that the outgoing Administration wants history to record that the gdp downturn started on President Bush's watch occludes the responsibility that the current Administration has for its sad response to the downturn.

When I last looked at the weekly numbers, employment topped in mid-Decemeber, 2000.

December the 13th or so, when CEOs realized they had won.

"Sad response to the downturn"? And just what are the supposedly "well-known prescriptions" that have not been implemented? Tax increases? Spending cuts? Who are you people? What universe do you inhabit? Do you really think that the full-employment economy of the bubble years, when companies without a penny of revenue, let alone income, hired droves of people and, in turn, supported ancillary service firms feeding off the same ephemeral stream of investment capital - to say nothing of the employment impact of the the Enrons, Worldcoms, Global Crossings, etc. - are coming back ???