Obama's unemployment projections

Topics: Stimulus
04 Jul 2009

From: Ervan Darnell

Mankiw has a revealing graph in his latest blog post [1] showing how far
wrong Obama's economic team's projections were. The forecast for June
unemployment was for 7.9% with the recovery plan and 8.4% without. The
actual is 9.5%.

As Mankiw points out, this doesn't prove that the "stimulus" worked or
failed. But it does say that the administration's forecasts are fantasy
and it suggests that there really isn't any evidence that the "stimulus"
does any good at all. Were they forecasting GDP one could forgive a
higher margin of uncertainty, but to miss unemployment is worse. To
measure unemployment in the short term is to measure the wrong thing
anyway. It is the metric Obama said we should use. Of course, the
government can buy useless jobs today (e.g. the GM bailout) at the cost
of more debt and higher unemployment (or more poverty) in the future.
It can target any unemployment rate it wants, but that solves nothing.
That they get wrong even this easier, and pointless, goal should give
real doubt that Obama's plan can solve any real economic problem.


[1] http://gregmankiw.blogspot.com/2009/07/unemployment-update.html