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An Accurate Unemployment Projection January 8, 2010

Posted by geoff in News.
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The Obama administration has explained the dire employment situation thusly:

  • The economy was way worse than anybody thought
  • Their predictions were in line with other economists
  • Things would have been worse without the stimulus

All in all, a nice deflection of blame from themselves (and usually on to the preceding administration). But history isn’t so kind.

You see, back around the time that the Obama team put forth their errant predictions, a fellow named Mark Zandi (Moody’s Economy) made a similar set of predictions using an actual economic model. And here’s how he did:

Yes, your eyes do not deceive you – the unemployment rate is closely tracking Zandi’s predictions for the non-stimulus case. This leads me to the following conclusions (which are somewhat at odds with the administration’s spin):

  • The economy was exactly as bad as some economists thought
  • The Obama team’s predictions were much more optimistic than other economists’
  • The stimulus has had no effect

[Note] There was an earlier post about Zandi’s predictions, and it included this caveat:

In fairness, 3 weeks later Zandi revised his prediction, claiming that the reduction of the spending bill by 5% would reduce job creation by 33% (at the Q410 point). I don’t know why his model has such an extreme sensitivity, but it still doesn’t explain why his model is tracking the “w/o stimulus” unemployment rate rise.

Comments»

1. Car in - January 8, 2010

See, Geoff, the thing is people are simply supposed to believe what Obama tells ’em. Then no one has any problems.

2. Herr Morgenholz - January 8, 2010

Perhaps Mr. Zandi lacked the imagination to envision just how badly they would mangle the “stimulus”. He probably only factored in 40% graft, or something.

3. geoff - January 8, 2010

He figured it pretty quickly – he’s been calling for a new stimulus package for more than 6 months.

Don’t know why he thinks a second one will work any better, though.

4. AJ Lynch - January 8, 2010

I think Zandi was also part of the group/ advisors who assembled the Spendulus bill. He backed it big time.

5. jukin - January 8, 2010

The answer, of course, is to increase energy and health care costs, raise taxes, and increase regulation.

“I think the government solution to a problem is usually as bad as the problem and very often makes the problem worse.”

“One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

Milton Friedman

6. geoff - January 8, 2010

You are absolutely correct – Zandi has been a huge fan and promoter of the stimulus. I think his model for the economy is probably pretty good, so his w/o stimulus predictions do well. But his assumptions for the benefits of stimulus spending appear to be wildly optimistic.

7. Eric - January 8, 2010

Why not just acknowledge the obvious? The stimulus resulted in a net loss of jobs.

8. PackerBronco - January 8, 2010

What’s this talk of a 2nd stimulus package? It would be the THIRD stimulus package. Remember the stimulus offered by Bush in the Spring of 2008?

The only thing these stimulus packages seem to stimulate is the federal government.

9. geoff - January 8, 2010

The only thing these stimulus packages seem to stimulate is the federal government.

And they just keep getting bigger.

10. LifeTrek - January 8, 2010

The Obama team needs to stop it with that, “things were worse,” crap.

The guy is the smartest man EVEH, he TOLD US things were the worst EVEH, we had to bankrupt the nation to fix it NOW!

Real, and far cheaper, solutions from anyone else were ignored.

It’s all you baby. Worst President EVEH, Jimmy Carter #43, BHO #44!

11. Richmond Liberty Alliance Blog » Blog Archive » Recovery: Don’t Believe The Hype - January 8, 2010

[…] Innocent Bystanders has the graph showing the projected unemployment numbers without the Stimulus Package, the projected unemployment with the Stimulus and the current numbers. […]

12. Dre - January 9, 2010

Ok, there’s not that many data points, but looking at the graph, I’m surprised at how the actual unemployment rate inflection points and line slope correlate with his stimulus projection. It looks like he was just off on the graft factor, as Morgenholz mentioned.
It would be interesting to see how this holds up in the future, but from what I can see he didn’t take the health bill, energy legislation and other schemes into consideration, so reality will be nowhere near his models once that crap-sandwich starts to pass.


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