February 18, 2004

Why Oh Why Can't We Have a Better Press Corps and Why Oh Why Are Ruled by These Idiots?

In the New York Times, Edmund Andrews writes:

Bush Officials Offer Cautions on White House Jobs Forecast:Treasury Secretary John W. Snow distanced himself on Tuesday from the Bush administration's official prediction that the nation would add 2.6 million jobs by the end of this year.

That prediction, which is far more optimistic than that of many private sector forecasters, was part of the annual economic report released last week by the White House Council of Economic Advisers and was immediately echoed by Mr. Bush himself. But on a tour through Washington and Oregon to promote the president's economic agenda, Mr. Snow and Commerce Secretary Donald L. Evans both declined to endorse the White House prediction and cautioned that it was based on economic assumptions that have an inherent margin of error. "I think we are going to create a lot of jobs; how many I don't know," Mr. Snow said, adding that "macroeconomic models are based on a lot of assumptions" and are "not without a range of error."

Unemployment and the nation's surprisingly sluggish pace of job creation has become a significant political weakness for Mr. Bush, who is on track to be the first president since Herbert Hoover to end his first term with fewer jobs than when he started...

Two interesting things:

  1. Edmund L. Andrews still hasn't figured out that the 2.6 million number is derived from a year average number--that the 132.7 million in the forecast is the number of payroll jobs the U.S. is supposed to hit in June and July, that the end-of-year number in the forecast is 134.5 million, and that the U.S. economy is supposed to create 320,000 jobs per month (3.8 million per year).
  2. Treasury Secretary John Snow has forgotten that his people in Treasury Economic Policy contributed to, signed off on, and briefed him on the forecast. If he doesn't like it, the time to say so is internally last December, not externally in February.
Posted by DeLong at February 18, 2004 08:15 AM | TrackBack | | Other weblogs commenting on this post
Comments

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Posted by: cj on February 18, 2004 08:29 AM

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cj, on the other hand, it is a reassurance that Google is not yet omniscient.

Posted by: Barry on February 18, 2004 08:34 AM

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Toypresidents, Inc. is a good one though. Talking President Dolls I like too.

Posted by: Kosh on February 18, 2004 08:35 AM

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This may not be the best place to point it out,
but it looks like productivity took a big hit in January.

Although industrial production was up 0.8% in Jan, manufacturing output only rose 0.4%. But manufacturing hours worked rose 0.6%. this implies manufacturing productivity fell 0.3% --
the difference reflects rounding errors.

I regularly compute monthly manufacturing productivity and my estimate has a very good record of matching the officially reported quarterly data.

The 3 mth growth rate of smoothed manufacturing productivity just fell from 5.0% to 4.3% versus
a 5.2% year over year growth rate.

Although the real retail sales data is not reported yet, nominal retail sales fell 0.3% in January while retail hours worked rose 1.2% --
implying a sharp drop in retail productivity.

Moreover, over half the sharp gain in non-auto retail sales was food & gasoline. This probably was due much more to price than volume.

Posted by: spencer on February 18, 2004 08:41 AM

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Don't you just love it when members of this administration just can't stay on message.

Tony Blair: "We've found dozens of WMD activities". David Kay: "That sounds like a made-up quote."

White House: "We're going to create 4 million new jobs this year." John Snow: "Well, we're going to create jobs. God knows how many."

One of the hallmarks of this administration that I've seen has been total control over the message. From having their Press Secretaries stick to an exact storyline to fighting leaks to stonewalling investigations, they do everything they can to make sure everyone stays on their message. The rise in slip-ups like this one suggests to me that they're getting sloppy, or that people really are starting to lose confidence.

http://balta.blogspot.com

Posted by: Balta on February 18, 2004 08:48 AM

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"Treasury Secretary John Snow has forgotten that his people in Treasury Economic Policy contributed to, signed off on, and briefed him on the forecast. If he doesn't like it, the time to say so is internally last December, not externally in February."

Not entirely fair to Snow. For all you, or we, know he did make his objections known in December and was overuled by the political branch. As you pointed out, job forecasts that showed fewer jobs on election day than the day Bush took office were going to be unacceptable. Isn't it likely Rove had the final say and whatever objections Snow might've had were simply ignored?

Posted by: flory on February 18, 2004 09:07 AM

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I hope Spencer keeps us informed of developments, and posts when he has preliminary overall estimates.

Posted by: jml on February 18, 2004 09:08 AM

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Ok, now the coffee is starting to kick in, my thoughts on this are a lot more firm. Here's what I'm betting is the cause of this.

The Administration really stuck their neck out by putting out an actual number for job growth, especially one that is so freaking high that it'd be almost impossible for the economy to hit it.

Right now everyone who matters, mostly everyone who votes, has heard that number...2.6 million new jobs this year (Yes, I know Brad, it's really 4; that's a moot point here; the problem is that it's an actual firm number, and it's one they might not reach)

What happens if 1 million jobs are created this year? I sure doubt that'll happen in the Bush economy, especially given the sluggish numbers we're seeing today, but say that it does. That's still 1.6 million short of the goal. That gives any Democratic candidate an excellent spin: the Bush Administration promised 2.6 million jobs and couldn't even deliver half of that. 1.6 million less people would still have jobs, and that's a pretty darn large constituency.

By putting out a number, they stuck their necks out and risked not hitting that number. If they can't hit that number, they're really going to take a political hit. In other words, in order to hedge their bets and cover their political arses, someone needed to rapidly back off of it. They needed to be a lot more vague now, so that they wouldn't be held to that number in the fall.

They got the good press from putting the number out, with any luck they'll get bad press for starting to retract it, but that's not what they're hoping for. They're hoping people forget that number entirely, unless they reach it. That's what this statement is about.

http://balta.blogspot.com

Posted by: Balta on February 18, 2004 09:20 AM

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"Why Oh Why Can't We Have a Better Press Corps and Why Oh Why Are Ruled by These Idiots? "

Double dipping, eh?

Posted by: Bulent on February 18, 2004 09:25 AM

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The admin and republicans in general have a record of describing poor economic results as great and depending on the ignorance of the press and public to not understand the difference.

This and other bogs should keep the pressure on the press to honestly report the admins economic record.

Posted by: spencer on February 18, 2004 09:26 AM

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"Treasury Secretary John Snow has forgotten that his people in Treasury Economic Policy contributed to, signed off on, and briefed him on the forecast. If he doesn't like it, the time to say so is internally last December, not externally in February."

True, true, true. But I was there when a Clinton cabinet member (who will remain nameless, but should have known better) did the exact same thing with the Social Security/Medicare economic assumptions during one of the Trustees' meetings. Her/his staff pointed out that he/she had signed off on those assumptions earlier. At least it wasn't in public, however.

Posted by: Dave on February 18, 2004 09:46 AM

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This just in: Bush is not a statistician!
Asked repeatedly if the White House stands by the forecast, McClellan refused to say. He declared, "The president is not a statistician."

Posted by: justaguy on February 18, 2004 10:08 AM

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Aha! The key is in this seemingly innocuous phrase:

"That prediction, which is far more optimistic than that of many private sector forecasters..."

It's all a plot to discredit economists on the public teat and broaden support for outsourcing yet another aspect of federal governance to the competitive private sector!

Posted by: Kip on February 18, 2004 10:17 AM

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With respect to the "2.6 million vs. 3.8 million" -- the number could be anything, depending on how job growth goes. We could lose thousands of jobs every month and still make the 2.6 million average increase if we gained 15 million in December. Or, we could gain 500,000 jobs for the first 6-7 months of the year and then level out. Either one would also reach the suggested level. Admittedly, neither is particularly likely -- in fact, job growth would probably be slow and increasing, meaning that more than the 3.8 million jobs would need to be created to meet the 2.6 million average.

Posted by: JBL on February 18, 2004 10:23 AM

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Actually, we'd need to gain 31 million jobs in December on 0 job growth for the first 11 months, or 500,000 in the first 7 months and 0 job growth thereafter; or, of course, 2.6 million in January and 0 thereafter.

Posted by: JBL on February 18, 2004 10:32 AM

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The snark in me wants to say that Bush's job is creating statistics, hundreds in Iraq and millions here.

But to more serious problems - namely that the lack of serious forecasting is making it very difficult to even know what to do, or how bad things really are. Are we doing well? Badly? No one can say, because the numbers really aren't there, because we cannot trust the ones which were sent to us from either the CBO or the OMB - or Labor or Commerce.

The economy isn't getting better, it is riding a wave of cheap money - the stuttering economy has lived from intervention to intervention - staggering along between fixes of cheap cash. But is this really sustainable? Is it the signal we want to send to the marketplace, namely "hang around and wait for a hit of cash?" The investment deficit points ominously to one of those rapid draw downs of value - where on that curve are we? Is someone going to be forced to "pull a Nixon" and essentially declare that previous financial obligations are inoperative?

In terms of policy - that is where it has to go. I think it has been reasonably well documented that the current policy regime is borrow and squander. What do we need to do to correct it? Where is the new source of demand going to come from that will reemploy the people laid off in the last recessionary wave? What do we have to do to the world financial system to unwind the problems that both Japan and the US have built up? How do we create a demand side economy in the Middle East - so that they start buying our goods for their people - rather than military hardware for their elites and stocks for their portoflios.

These are issues that hang on people's minds in policy circles, but have not bee trnaslated to Americnas - except in bastradized forms about "wars of ideas" and the rest.

This failure - an endemic intellectual failure in both numbers and words, is the cheif prolbem.

Prof. Delong is one of the best we have in the US - I hope in his blog he will start not only pointing out the discrepencies in our econimc numbers, but start pushing discussion of serious policy ideas which could be use dto drie the debate.

There is power here, and it should be used.


Posted by: Stirling Newberry on February 18, 2004 10:37 AM

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Spencer -

"This may not be the best place to point it out,
but it looks like productivity took a big hit in January."

What are the possible implications?

Posted by: anne on February 18, 2004 10:37 AM

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I'm sure someone has pointed this out already, but if Bush gets the go-ahead to make illegal immigrant workers semi-legal then he'd technically be adding 8 million jobs in one fell swoop.

Maybe this is a little cynical of me, but I wouldn't put it past these clowns.

Posted by: Anthony Bar on February 18, 2004 10:41 AM

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Spncer,

I like the math, but I'm not sure the usual conclusions that one would draw apply to the January data. Retail sales excluding autos should track better with the hours data than sales overall, even though the productivity calculation may ignore that nicety. Retail sales ex-auto were up 0.9% in January. That still implies a productivity fall in the retail sector in the month, but January is an awfully noisy month.

The factory output data were not sensational in January, but the overall industrial production data were a good bit better. Overall goods producing hours were up 0.5% in January, while IP rose 0.8%, so in the wider goods producing sector, January probably saw a rise in goods sector productivity, even though the narrower factory sector did not.

I don't mean to suggest that productivity growth is not slowing. Compared to Q3, it had to, though Q1 may come in roughly in line with Q4. It's just that January is kinda fluky.

Not to answer Anne's question for you (well, OK, I am), but I'm not sure there are any implications to be drawn from the productivity data, beyond just keeping score. We already know what happened (prior to revisions) to output and in the labor market. Only if we assume that January tells us something about the underlying trend in productivity can we draw any implications further implications. As may be evident from my comments above, I'm not sure January tells us much about the underlying trend.

Posted by: K Harris on February 18, 2004 10:56 AM

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Oh, bad. Sorry Spencer. When hashing over the data, I should have the decency to spell your name right.

K

Posted by: K Harris on February 18, 2004 11:00 AM

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http://www.nytimes.com/2004/02/18/opinion/18WED2.html

Squeezing the Poor for Votes
New York Times

Destructive fine print is showing through the budgetary bandwagon President Bush has designed for his re-election drive. It turns out that hundreds of thousands of poor and low-income families will lose child care and housing assistance if the administration's ballyhooed spending cuts take effect. In trying to campaign as a late-blooming fiscal disciplinarian, the president is making a show of marking 128 programs — count 'em, G.O.P. budget hawks, 128 — for elimination or cutbacks in many vital social service areas. As if they are at the heart of the administration's rolling deficits, which threaten the nation's economic future....

Posted by: anne on February 18, 2004 11:09 AM

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http://www.nytimes.com/2004/02/17/opinion/17KRUG.html

The Health of Nations
By PAUL KRUGMAN

People are happy with the quality of health care, if they can afford it, but they're afraid that they might not be able to afford it. Unlike other wealthy countries, America doesn't have universal health insurance, and it's all too easy to fall through the cracks in our system. When I saw that the president's economic report devoted a whole chapter to health care, I assumed that it would make some attempt to address these public concerns.

Instead, the report pooh-poohs the problem. Although more than 40 million people lack health insurance, this doesn't matter too much because "the uninsured are a diverse and perpetually changing group." This is good news? At any given time about one in seven Americans is uninsured, which is bad enough. Because the uninsured are a "perpetually changing group," however, a much larger fraction of the population suffers periodic, terrifying spells of being uninsured, and an even larger fraction lives with the fear of losing insurance if anything goes wrong at work or at home.

The report also seems to have missed the point of health insurance. It argues that it would be a good thing if insurance companies had more information about the health prospects of clients so "policies could be tailored to different types and priced accordingly." So if insurance companies develop a new way to identify people who are likely to have kidney problems later in life, and use this information to deny such people policies that cover dialysis, that's a positive step?

Having brushed off the plight of those who, for economic or health reasons, cannot get insurance, the report turns to a criticism of health insurance in general, which it blames for excessive health care spending....

Posted by: anne on February 18, 2004 11:13 AM

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In general, I only expect about 80% of the facts in an average newspaper article to actually be correct. One of the reasons why the press is struggling with getting this correct is that the administration is not helping them. First they publish an out of date number, then they refuse to update the facts. In a rational world, the WH would issue a press release with an update that reporters could use to get it right. That the WH is not publishing this speaks to the fact that the WH would prefer to bury it.

At least this article gets the gist of the story correct. The WH has issued an overoptimistic number and now they are backpeddling. Details are harder to pin.

Posted by: bakho on February 18, 2004 11:49 AM

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I have been asked to sign-off on memos I did not believe in. My first response is to request a chance to revise the memo. If I'm told no to my request, I say no to the request for my signature. Then again - the bosses often hate that. Oh well.

Posted by: Harold McClure on February 18, 2004 12:17 PM

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http://www.cbpp.org/2-18-04ui.htm

White House Backs Off CEA Prediction Of “Average” Job Growth; Contrary To Reports, CEA Predicted 3.6 Million — Not 2.6 Million — Jobs Would Be Created In 2004 - 2/18/04

The Administration has just backed off its own recent job growth projections, even though the CEA characterizes them as reflecting average growth. The degree to which job growth is coming in below the Administration's own projections has been significantly understated in recent media stories.

Posted by: anne on February 18, 2004 12:22 PM

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the real crime here is that these new jobs were part of the supply-sider strategy to increase tax revenue (remember that big, fat deficit) and make the deficit issue look like a non-issue.

Posted by: jake on February 18, 2004 12:23 PM

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Anne,

I'm no economist, but I think the significance of declining productivity in this context is that it requires additional hiring to maintain level output, much less achieve growth. I believe Bush's captive statisticians were counting on declining productivity to encourage hiring. So, those of us who want Bush to fall on his face need to root for level or increasing productivity in the short term.

Posted by: OkieByAccident on February 18, 2004 12:52 PM

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http://billmon.org.v.sabren.com/archives/000172.html

Maybe we should solicit an encore presentation from Billmon addressing the jobs number predictions?

Posted by: dubblblind on February 18, 2004 01:36 PM

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God knows how many. - it's a good thing we have a president selected by God, maybe he'll create a few more jobs for his chosen one.

Posted by: BudMan on February 18, 2004 01:55 PM

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Does anyone else see this as a repeat of what happened to O'neill? The political branch basically making shit up while a Sec. of Tres. who should know better sits by going "whhaaaaaaa?"

Posted by: Dan on February 18, 2004 03:00 PM

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In the land of economics (or atleast, the portion that reaches CNN et al,) the public is bethumped by the teeny tiny numbers ( 0.2% rise in the CPI...)
and the gargantuan numbers ( 132.7 million vs 131.8 million average ...)
Only the bloggers are willing to put up with it. Only bloggers here Like to hash it out. This is cake for them ( I mean us...usually).
So who wants to be Snow? flory has it right IMO --Snow vs Rove ends like Bambi vs Gadzilla.
--Anthony
thanks for your post as this was news to me. I am not sure they could spin the 8M (additional?) newly recognized workers in the way you fear. We are talking about payroll employment, but you never know.

Posted by: calmo on February 18, 2004 05:44 PM

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I think Terence Hunt has it close to correct on AP

The administration's economic forecast, on which it based its budget projections, predicted that payroll jobs would average 132.7 million per month this year, an increase of 2.6 million from the 2003 monthly average.

However, to achieve that average, the economy would have to create more than 2.6 million jobs in coming months because the level of jobs at the beginning of the year was lower than the administration had built into its forecast.

For January, there were 130.2 million Americans working, according to the Labor Department's payroll survey. To achieve its forecast of 132.7 million jobs on average each month this year would require the creation of 460,000 jobs per month over the next 11 months.

He quotes CBPP and EPI as his source, not the administration. Where do I go to get honest answers these days?

http://apnews.excite.com/article/20040219/D80Q2UJ01.html

Hunt includes some great one liners from the Dems.

Six Democratic senators sent Bush a letter lambasting the administration for the Mankiw and jobs flaps. "When the White House's official economic report makes the wrongheaded suggestion that moving jobs overseas is beneficial to the economy and contains job projections that are not endorsed by your own Cabinet members, serious questions are raised that the administration's economic policies are in disarray," the letter said. It was signed by Sens. Tom Daschle of South Dakota, Edward M. Kennedy of Massachusetts, Hillary Clinton and Charles Schumer of New York, Jon Corzine of New Jersey and Debbie Stabenow of Michigan.

House Minority Leader Nancy Pelosi, D-Calif, said, "President Bush is rapidly becoming the permanently surprised president. He is surprised that every economic prediction that he and his administration make does not pan out."

Rep. Rahm Emanuel, D-Ill, a senior adviser in the Clinton White House, said, "This president faces a credibility gap with his own economic team that's as wide as the employment gap for millions of American workers." ouch

Meanwhile the Dem Ads for IL Senate reel off a litany of plant layoffs. The numbers are staggering.

Posted by: bakho on February 18, 2004 08:16 PM

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Nice site. Keep up the good work.

Posted by: online pharmacy on June 6, 2004 08:13 PM

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