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Washington Has Swallowed Their Economic Compass

What the chart (courtesy of Geoff) at the bottom illustrates is a point that I have been writing about for the better part of a year, Washington has been slow to recognize that we have a significant problem, they have been lethargic in their response to it, and their "solutions" have been impotent.

The problem with Washington underestimating the gravity of the unemployment situation is that it calls into question the effectiveness of every other piece of legislation that has been passed or action that has been taken. From the bank stress tests, to the $8,000 first time home buyer tax credit, to the $787 billion "stimulus", to the Fed's reckless decision to invest $1.25 trillion in mortgage backed securities.

Despite all of this "stimulus", the economy and housing market continue to deteriorate. Credit card and mortgage defaults are only accelerating, and yes, the unemployment rate is nearly two points higher than Washington thought it was going to be.

Posted by Mark MacKenzie on 06/21/2009 07:08 PM

Comments (12)

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12 Comments on Washington Has Swallowed Their Economic Compass

JUN

2009

I would tend to agree with you. However, what is your suggestion. Mine is to cut taxes and spending like crazy. Hold big businesses and politicians responsible. I have nothing against big business, but their should be a fair playing Field.

Mark - The government made a huge mistake by dedicating our resources to saving banks, Wall Street firms, and auto makers. Now we lack sufficient resources to deal with the real issues.

JUN

2009

Mark - this is what happens when legislation is rushed through without reading it. Andwhen years of partisanship and ideology is placed ahead of the welfare of the United States and it's citizens.

Mark, show me a graph that isn't from a right wing, anti-Obama website, then maybe I'll listen up. Something from an esteemed economist would be good.

Gene: I wrote a book about my solution. :)

John: What do you mean we don't have any money left? ;)

Mike: Ideology can't run a business or a country.

Terry: What specifically is wrong with the plotting of the unemployment rate on this chart?

Seems like all the jobs being created are in the federal government. All of which are temporary at best. Let's see some real stimulus like cutting taxes, cutting spending, and shrinking government. That would be a nice change.

Mark, I considered the source. Innocentbystander.net is not exactly unbiased. Thats why I'd like to see something from a non-partisan economist. Anyone can draw lines on a graph to make their point.

Terry - the basic chart came from then President elect Obama, released on January 10 in order to justify his stimulus plan being passed. (You were provided the source to this the last time you accused an author of partisan statistics). The added maroon dots are the actual unemployment figures for that same time period based upon data released by the U.S. Bureau of Labor Statistics, which, is part of the now President Obama administration. But maybe that is not non-partisan enough for you.

Mike: Thanks for spelling that out. Apparently if the souce is not NBC, it is not a valid source.

Terry: There is no spin on this data, unless of course the BLS is a right-wing organization.

Mark, I didnt say there was spin, I only said its easy for someone to put their own spin on a graph.

Mike, here is the source of that graph.

By way of Paul Krugman, here is the estimated impact on employment provided by C. Romer and J. Bernstein.

The estimated impact on unemployment is shown below, in a figure from the document.

Terry - you use Krugman as a source, well that is certainly non-partisan, NOT! Actually, Krugman is not the source, it comes from the Jan 10, Council of Economic Advisors report the link to which I provided in an earlier post when you used the same non-partisan source label. As stated, the added maroon dots are showing the actual unemployment rate since this chart released by the BLS. The most current figure is 9.4%, as indicated on Marks graph. So what is the spin? BTW - Obama has indicated he believes the rate will go to above 10% before the end of the year.

The gist is, the Obama data is glaringly inaccurate and the stimulus package is not working. It is having no net effect on unemployment, or employment. It was very Pollyanish at best.

Terry: With due respect, what is the point you are trying to make?

We are all talking about the same graph and assumptions. The red dots on the above graph indicate what is actually happening today. Do you refute that the current unemployment rate is 9.4% and rising, above what the Obama administration had projected?

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Mark MacKenzie

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