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The Failure of Obama's Economic Forecasters

• Economic Policy Journal
 The Job Impact of the American Recovery and Reinvestment Plan, for the then incoming Obama Administration. They detailed what would happen to the economy with a "stimulus" package and what would occur without a package. The chart below is in the report (Click on chart for a larger view):



With the stimulus package, they projected unemployment peeking at just under 8%. Without a stimulus package, they projected unemployment peeking at 9%. Today, despite the stimulus package, unemployment stands at 9.8%. How did Romer and Bernstein get is so wrong? It is instructive to read their full report.

They expected not only a gain in employment beginning in Q4 2009 (Which appears very unlikely at this point), but remarkably they expected the gain to come to a significant degree from the construction industry and manufacturing. They write:
The estimates suggest that 30% of the jobs created will be in construction and manufacturing, even though these industries employ only 15% of all workers.
There is not one mention of the business cycle or monetary theory. Their work is based, as they tell us on:

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