An Accurate Unemployment Projection January 8, 2010Posted by geoff in News.
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.