July 13, 2004

Bush Administration Employment Forecasts

Back on February 9, 2004, the Bush administration issued its Economic Report of the President and its 2004 economic forecast. In it, the Bush administration predicted that by the middle of this year payroll employment would have recovered to 132.7 million, and thus finally crept out of job-loss territory to a value higher than the 132.5 million payroll employment number reached at the peak of the last boom in the first quarter of 2004.

Needless to say, this forecast did not come to pass: we were already far below it at the moment of its release, and by June payroll employment was 1.2 million lower than the value of the forecast that the Bush administration had released only four months before, in February.

I can find nobody who can add--and have never found anybody who can add--who will defend this forecast in public, or even sketch out in public a scenario for how this forecast could have ever come to pass. It assumed, among other things, a total collapse in the rate of productivity growth in the first half of 2004--a collapse in productivity growth which would have had severe and adverse effects on stock prices, investment flows, and demand.

It is difficult to make an employment forecast that goes as erroneous in as short a time as the Bush administration's has. Nevertheless, they managed.

Posted by DeLong at July 13, 2004 09:24 PM | TrackBack | | Other weblogs commenting on this post
Comments

Again ... You can convince the Prols that a square is a circle simply by clipping a little off the corners each time, then repeating the lie over, and over, and over again. [Goebbels]

"Yellow cake", "yellow cake", "yellow cake".
[Fleischer]

It's little known, but during that period in the past when Netherlands was encouraging public art funding of all kinds, a chorale of anus singers arose, farting out etudes to great fanfare.

BushCo is just the corresponding fart symphony,
a focus group on meth, singing to its fetid base.

Posted by: Tante Aime on July 13, 2004 11:38 PM

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Gosh, only need an average of 200,000 net jobs a month to break even. Or 300K a month to election day. But since it looks like July will be kinda like June, make that 400K a month for Aug-Oct.

If there is anything to the newly born sorta-kinda expansion at all (other than what is ginned up temporarily with rebates and tax refunds to the masses) breaking even by the end of the year could well happen.

Hope that builds some suspense.

Regarding those wrong-end singers: I thought they were only in John Waters movies. Either Female Trouble or Pink Flamingos, I think. Not that I ever watched that kind of stuff. NO... I read about it in, um, a critical film studies class... yeah, that's the ticket.

Posted by: jml on July 14, 2004 12:21 AM

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I find it hard to believe that even the Administration took those forecasts seriously. These folks have no problem lying with a straight face.

Posted by: Chuck Nolan on July 14, 2004 04:28 AM

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Bush campaign policy director Tim Adams replied that the administration's early estimate of 6 million new jobs was not met because of factors that could not have been predicted at the time, such as the Sept. 11 attacks, subsequent wars in Afghanistan and Iraq, and the rising price of oil.

Posted by: bakho on July 14, 2004 06:57 AM

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Let me see if I have this right. First the administration projects big job growth. Second, it starts a war in Iraq. Third, it says that the job growth won't happen because of the war, which was "unforeseen." Fourth, it says that the lower growth is not its fault and that it shouldn't be held responsible.

Posted by: budgetwonk on July 14, 2004 07:31 AM

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A "lie" is roughly defined as intentionally expressing incorrect information (to others or yourself). It can be _unethical_ (which you seem to imply in this case) only when it conflicts with somebody's ethics.

Posted by: cm on July 14, 2004 08:08 AM

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Well, cm, it conflicts with MY ethics. YMMV.

Posted by: Mellifluous on July 14, 2004 09:06 AM

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Is it possible to compare the employment forcasts of Clinton to Bush? Just to see who had the better advisors.

Posted by: notanumber on July 14, 2004 09:20 AM

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I think there is very little employment or consumer income recovery apart from that sparked by sporadic cash distributions to middle and working class via tax refunds, rebates, etc. So average will be 150-250 K jobs a month. So that will make about -300K to zero net new jobs as of Jan 1.

I wonder what the spin will be during the campaign? All they can do is use vague buzz words like "solid" "continuting" etc. They can't quote any figure other than an anomalous monthly uptick in employment, or something similar. They can point to corporate profits, but I am not sure that will be a wise approach if the average monthly employment numbers stay mediocre to poor.

Posted by: jml on July 14, 2004 09:53 AM

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Krugman had great graph back in March that made the absurdity of this predictions quite vivid. You can see it at http://brahn.dailykos.com/story/2004/3/9/45539/14063

Brad, it would be awesome if you could crunch the numbers and present the data in a similarly potent form.

Posted by: Benjamin Rahn on July 14, 2004 10:48 AM

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Stata does really, really nice graphics, very customizable.

Posted by: CalDem on July 14, 2004 10:49 AM

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Should that be "peak of the last boom in the first quarter of 2001"?

Posted by: Matt Weiner on July 14, 2004 11:10 AM

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Prof. DeLong should be awarded the Darrell Huff medal. A fair chart would have shown the projected and actual employment figures, not just the difference of the two figures.

Actual employment did grow rapidly this year, just as the Economic Advisors predicted, although the actual growth was well below their prediction.

How bad was their error? At the end of last year, some pundits were predicting a "jobless recovery". The actual growth i half a year was over a million jobs. These pessimists were wrong by about the same amount as the Federal Government's optimists.

Posted by: David on July 14, 2004 11:35 AM

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The fart singers were mentioned by Montaigne huundreds of years ago. An enduring tradition.

Posted by: zizka / John Emerson on July 14, 2004 11:37 AM

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It's almost as if the Bush Administration deliberately put out an economic forecast that was false.

Posted by: Lawrence Krubner on July 14, 2004 11:42 AM

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David,

The comparison that sheds light on the Administration's honesty (or lack thereof) is the comparison between the Administration's forecast and the Blue Chip forecast.

I discuss that comparison here:

http://econ4dean.typepad.com/lerxst/2004/07/so_far_blue_chi.html

Posted by: lerxst on July 14, 2004 11:45 AM

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Last Jan the NYT had this article/

"To Understand U.S. Jobs Picture, Connect the Dots, and Find the Dots"

http://www.nytimes.com/2004/01/12/business/12jobs.html

Bushco used Bureau of Labor Statistics and Household Survey to cook employment numbers.

However, like Brad's chart reveals their plan STILL did not work because the Bush economy and 'good job' creation is really a disaster.

What both surveys do is sort people into employed, unemployed or out of the labor force. But, a growing number of people do not fit neatly into these categories, economists say. More often than in the past, for example, people who lose a job list themselves as early retirees or self-employed rather than unemployed.

Andrew M. Sum, a Northeastern University labor economist and lead author of a recently released study of the two employment measures that underscores the value of the household survey, put it this way in a statement: "At no other point in this nation's last five recovery periods have so many people been employed as independent contractors, as temporarily self-employed, or paid under the table."

Posted by: standa on July 14, 2004 12:54 PM

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This is pretty picky, but I think the graph would read better if either the labelling were different or the scale were reversed.

A cursory scan of this plot makes it look like the shortfall is decreasing over time, but it's actually increasing.

Posted by: greg on July 14, 2004 12:56 PM

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lexrst -

I grant your and Prof. DeLong's point. The federal government projected a big growth in jobs this year. The actual growth, though large, was less than they projected.

Is this a big deal? I don't think so. Most economic projections don't turn out to be perfectly accurate. In fact, at any given time, leading economists generally have a range of estimates when projecting economic variables.

Bush critics have already debased the English language by using the word "lie" to describe a statement that a speaker believed at the time he said it, if it later turns out to be incorrect. Is the word "lie" now to be used for a projection that doesn't fully come about? Give me a break.

Posted by: David on July 14, 2004 01:16 PM

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A consistent theme coming from the NYT these days is that gains or losses in employment are pretty much due to cyclicality in the economy that is outside the control of the president, who has only weak tools available, and that assigning blame or credit is a silly game. I wish Brad DeLong would comment on this line of thinking, which seems ridiculous to a layman like myself.

Posted by: Bob H on July 14, 2004 01:31 PM

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David,

Yes forecasts (even honest ones) are often way off the mark, but typically the CEA (if only to remain credible) has not had outlandish forecasts that are beyond even the most optimistic private forecasters. In that sense, the Bush Admin has really deviated from past practice. I won't put a label on it but just leave it at that.

It may be hard to believe but once upon a time Paul Krugman worked in the Reagan CEA. I would be hard pressed to imagine a high level left leaning economist doing that kind of service today.

Bob,

You've commented similarly at Kautilyan. My reaction is that the Times does have a general point that is valid. Its when they get to the specifics that they often get it wrong.

We probably would have had a recession in 2001 in any case (even with Gore), but could we have had a fiscal policy that would have lessened the job loss and maintained fiscal sanity?...yes. So yes a lot is cyclical, but many problems have been compounded by bad policy decisions.

Posted by: lerxst on July 14, 2004 02:20 PM

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This has been mentioned above, but there is a typo

"peak of the last boom in the first quarter of 2004."

2004 should be 2001.

Posted by: Robert Waldmann on July 14, 2004 03:12 PM

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And labor's share of GNP down to 62%, compared to 75% for most of the 20th century, according to my 1965 edition of Samuelson's Economics.

Posted by: Luke Lea on July 14, 2004 03:25 PM

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David, the backbone administration doesn't merely "project." They don't hedge. They don't say this is a likely outcome. They assert.

For instance, forget this year's projection for the moment; they asserted, with complete and utter confidence and no basis in rationality, that the 2003 so-called stimulus package would create 5.5M new jobs between july 1, 2003 and december 31, 2004.

When someone makes an assertion that out of touch with reality, then they don't get off the hook by saying, well, it was only a projection.

Similarly, as they scaled back the ridiculous assertion they made in 2003 to the slightly less ridiculous projection they made for 2004 jobs, it was evident from the moment they made the projection (see prof delong's real-time commentary) that it too had no basis in rationality, so again, the notion that it was just a "projection" doesn't let them off the hook. (Go to the Stan Collender thread above, for a related look at the same phenomenon: these aren't projections they are making. They are political assertions.)

Bob H, it is certainly true that presidents do not hire and fire the 130M+ workforce; those decisions are made by individual businesses. But presidents do make decisions about the kind of macro policies in which the hiring and/or firing takes place.

As lerxst notes, we certainly would have had a recession under Al Gore, too, so blaming Bush for the recession would be wrong. But blaming Bush for failing to pursue policy choices that were being offered by people who were interested in job growth - so that instead he could pursue policy choices offered by people who were interested in cutting taxes at all costs - is perfectly fair.

We didn't have to have such a lousy job creation record in this recovery.

Posted by: howard on July 14, 2004 03:32 PM

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Mellifluous: What I meant to express is that somebody who does not have ethics of a certain brand will not consider lying, or lying to certain people (including the broad public), unethical. They may not even perceive a lie as such, merely as an incorrect factual claim made for certain calculated effect.

Posted by: cm on July 14, 2004 09:14 PM

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David: "Bush critics have already debased the English language by using the word "lie" to describe a statement that a speaker believed at the time he said it, if it later turns out to be incorrect. Is the word "lie" now to be used for a projection that doesn't fully come about?"

Nowhere in the original article is an assertion or insinuation made that this erroneous forecast is a lie. AFAIK I was the first commenter to use the word.

The problem with lying (from the outside perspective) is that it is hard to prove if it is done in such a way that you can weasel out by claiming honest mistake. But you please tell me where the exact borderline between a "misleading claim" and a "lie" is, other than that the former may not have been made intentionally, but either in good faith or in negligence.

Whether the projctions have "not fully" or "not at all" come about, I leave to others' judgement; on whether increasingly ridiculous projections were made on honest hope, incompetence, or intent to spin & deceive, I can strictly speaking only speculate, so everybody be their own judge.

And I don't think we are debasing language here. How about debasing language when this administration is speaking about "prosperity", "strong economy", "freedom", or "democracy"? Mind you, all in quotes.

Posted by: cm on July 14, 2004 09:32 PM

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Another commment on David's comment: I don't think that David's characterization of the term "jobless recovery" is fair. That term has not been used as a shorthand way of making the prediction that the number of jobs created under Bush will be exactly zero. The term is a shorthad way to say that in terms of employment and growth in real wage income, this recovery is very poor by post-WWII standards. That that is true (check out the Economic Policy Institute tables and figures, or download some data from the BLS).

At any rate, I have made my prediction. For lack of time to get the data processed and doing some kind of statistic, I used one of the oldest methods known to humankind, the eyeball approach. I think Bush will be a couple of hundred K jobs short in Jan 2005, unless he smartens up and decides to sprinkle a little more cash on the middle class and below between now and the end of the year.

Posted by: jml on July 14, 2004 09:42 PM

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