Monday, June 08, 2009

Unemployment chart

From the report prepared to sell the stimulus, The Job Impact of the American Recovery and Reinvestment Plan
First, the likely scale of employment loss is extremely large. The U.S. economy has already lost nearly 2.6 million jobs since the business cycle peak in December 2007. In the absence of stimulus, the economy could lose another 3 to 4 million more. Thus, we are working to counter a potential total job loss of at least 5 million. As Figure 1 shows, even with the large prototypical package, the unemployment rate in 2010Q4 is predicted to be approximately 7.0%, which is well below the approximately 8.8% that would result in the absence of a plan.

Well. I seem to recall criticism from the left aimed at the Bush administration for "fear-mongering," but this is a pretty scary chart:

The Obama team sold the stimulus by telling the Congress and the American people that unemployment would be much worse if the stimulus were not enacted than it would be if We The People agreed to take on the additional $775 BILLION in debt. And the President sold his plan hard, using the full standard Obama quota of strawmen and false choices.
If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. ...There is no doubt that the cost of this plan will be considerable. It will certainly add to the budget deficit in the short-term. But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes, and confidence in our economy...That work begins with this plan – a plan I am confident will save or create at least three million jobs over the next few years. It is not just another public works program...Our government has already spent a good deal of money, but we haven't yet seen that translate into more jobs or higher incomes or renewed confidence in our economy. That's why the American Recovery and Reinvestment Plan won't just throw money at our problems – we'll invest in what works...I urge Congress to move as quickly as possible on behalf of the American people. For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse...It will not come easy or happen overnight, and it is altogether likely that things may get worse before they get better. But that is all the more reason for Congress to act without delay. I know the scale of this plan is unprecedented, but so is the severity of our situation. We have already tried the wait-and-see approach to our problems, and it is the same approach that helped lead us to this day of reckoning.

So the President was going to act, unlike unnamed others who want to "want-and-see," or other unnamed others who want to do "too little or nothing at all." He recognized, as that chart above showed, that things would get worse before getting better, but was confident that things would be much, much worse, possibly irredeemably worse, if the stimulus package were not passed. And the Congress gave it to him.

Well, Geoff at InnocentBystanders has been comparing the Obama economic projections to evolving reality. He's been adding the actual unemployment numbers to the Obama team's chart on a monthly basis. The results are ... informative.

Some of us thought that the stimulus package was far more likely to do significant harm to the economy than to stimulate anything like economic recovery. The evidence thus far suggests that we were right and the President was ... not.

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