‘Jobs Created or Saved’ Is White House Fantasy: Caroline Baum
Commentary by Caroline Baum Oct. 28 (Bloomberg)
Heresy, thy name is Christina Romer.
Last week, the chairman of President Barack Obama’s Council of Economic Advisers — a position that carried the title “chief economist” until Larry Summers took up residence in the White House — testified to the Joint Economic Committee on the economic crisis and the efficacy of the policy response.
Here’s the executive summary in case you missed it:
The crisis: “Inherited.”
The economy: “In terrible shape” (the inherited one).
The shocks to the system: “Larger than those that precipitated the Great Depression.”
The policy response: “Strong and timely.”
The efficacy of the policy response: a 2 to 3 percentage point addition to second-quarter growth; 3 to 4 percentage points in the third; and 160,000 to 1.5 million “jobs saved or created,” a made-up metric if there ever was one. (More on that later.)
What was most puzzling about Romer’s Oct. 22 testimony was her comment on the waning effect of fiscal stimulus.
“Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009,” Romer said. “By mid-2010, fiscal stimulus will likely be contributing little to growth.”
Phi Beta Iota: The US Government has lost the ability to think intelligently or tell the truth to the public. Below is one graphic on the various forms of data pathology that accompany information asymmetry, linked to our three-part series on healing the US Government.