Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Sunday, August 27, 2006

From Archives: Paul Krugman: Delusions of Triumph

From archives: I want to keep this at hand:

Delusions of Triumph - The Archive - The New York Times: By PAUL KRUGMAN (NYT) 752 words Published: May 25, 2004

Republicans, we hear, are frustrated by polls showing that the public has a poor opinion of George Bush's economic leadership. In their view, the good news about Mr. Bush's economic triumphs is being drowned out by the bad news from Iraq.

A recent article in The New York Times, citing concerns of ''Republican elected officials, pollsters and strategists,'' put it this way: ''The creation of nearly 900,000 new jobs in the last four months -- a development that might otherwise have redefined the race in Mr. Bush's favor -- has been largely crowded out of the electorate's psyche by images from Iraq.''

Funny, isn't it? In 2002, Republican strategists used the impending Iraq war to distract the public from the miserable economic news. Now they're complaining that Iraq is taking voters' focus off the economy.

But is the economic news really that good? No. While the recent economic performance is better than in the administration's first three years, it isn't at all exceptional by historical standards. And after those three terrible years, the economy has a lot of ground to make up.

Let's start with the ''nearly 900,000 new jobs'' created in the last four months. Is that exceptional? Well, during the first four months of 2000, the last presidential election year, the economy created 1.1 million new jobs. An e-mail message to Bush's supporters from Ken Mehlman, his campaign manager, takes a longer view, boasting of 1.1 million jobs created since last August (when job growth finally turned positive). But in April 2000, payroll employment was 2.3 million higher than in August 1999.

And that was after seven years of sustained employment growth; rapid job growth is hard to achieve when the economy is already close to full employment. To find a year comparable to 2004, we need to look back to 1994, when the economy was still recovering from the first Bush recession. In the first four months of that year, the economy added almost 1.3 million jobs.

The experience of 1994 also gives us some indication of how likely job growth is to ''redefine'' an election. Between December 1993 and November 1994 the economy gained 3.6 million jobs, a number beyond the Bush administration's fondest dreams. Yet voters, convinced that Bill Clinton was leading the country astray, gave his party a severe defeat in that year's midterm elections. So it's interesting that a new CBS News poll finds that 65 percent of Americans believe that the country is headed in the wrong direction -- a level not seen since 1994.

If you want to convince yourself that I'm not playing games with dates, go to the Bureau of Labor Statistics Web site at stats.bls.gov. Click on ''U.S. economy at a glance,'' then on the green dinosaur next to ''Change in payroll employment'' for a 10-year chart of monthly job gains and losses. The chart reveals that for 37 months, from January 2001 to February 2004, the Bush administration presided over dismal job numbers: employment for each month fell, or grew far more slowly than the norm during the Clinton years. March and April were much better, but they still weren't exceptional by 1990's standards.

And a mere return to Clinton-era job growth isn't enough: after all those years of poor job performance, we need extra-rapid growth to make up for lost time.

Here's one way to look at it. The job forecast in the 2002 Economic Report of the President assumed that by 2004 the economy would have fully recovered from the 2001 recession. That recovery, according to the official projection, would lead to average payroll employment of 138 million this year -- 7 million more than the actual number. So we have a gap of 7 million jobs to make up.

And employment is chasing a moving target: it must rise by about 140,000 a month just to keep up with a growing population. In April, the economy added 288,000 jobs. If you do the math, you discover that President Bush needs about four years of job growth at last month's rate to reach what his own economists consider full employment.

The bottom line, then, is that Mr. Bush's supporters have no right to complain about the public's failure to appreciate his economic leadership. Three years of lousy performance, followed by two months of good but not great job growth, is not a record to be proud of.

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