Currently there are 6.2 million people in this country who have been out of work for six months or longer -- about 45.1% of the 13.9 unemployed people seeking work. This is a higher percentage than during the Great Depression. The graphic and statistic are from the
CBS Evening News site.
Back on January 9, 2009, Christina Romer and Jared Bernstein (then President-Elect Obama's economics gurus) released a report entitled The Job Impact of the American Recovery and Reinvestment Plan.
ReplyDeleteOn page 4 of the report (page 5 of the linked .pdf) Romer and Bernstein presented a graph predicting the unemployment rate with and without the Recovery Plan. Without the plan, unemployment would rise to 8.8%; with the plan, the jobless rate would peak at around 7%.
Taking Romer and Bernstein's predictive chart, and plotting the actual unemployment rate, based on numbers from the Bureau of Labor Statistics, we get this chart, which shows that despite the $800 billion dollars spent on the Recovery Plan, unemployment has actually exceeded the levels projected for doing nothing.
If the report is to be believed, our employment rate would be better today if we had foregone spending nearly a trillion dollars and simply done nothing.
CT-
ReplyDeleteI believe your conclusion is flawed. It';s more likely that without the stimulus the unemployment rate would be even worse than it is. They didn't just underestimate the rate with the stimulus -- they underestimated the rate both with the stimulus and without it.
Ted,
ReplyDeleteI actually agree with you, up to a point. The operative phrase here is "If the report is to be believed,...". I don't think it is.
Whether we would have been better off having done nothing, or something other than what Romer and Bernstein recommended is debatable. But one thing is certain: the Keynesian approach of the Recovery Plan was oversold. The chart shows by how much.