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:
Join us on our
Share this page with your friends
on your favorite social network: