No economist foresaw the severity of the recession … and no president could have done a better job … wrong and WRONG!

Obama has been stumping that no economists foresaw the severity of the recession … so don’t blame him the a trillion dollar faux-stimulus didn’t keep unemployment under 8%.

Former President Clinton pitched at the DNC that no president – not even him – could have pulled us out of the dive better than Barack did.

Huh?

Last weekend, the  NY Times debunked the first claim:

President-elect Obama’s economic team spent the final weeks of 2008 trying to assess how bad the economy was.

It was during those weeks ..when they first discussed academic research by the economists Carmen M. Reinhart and Kenneth S. Rogoff that would soon become well known.

Ms. Reinhart and Mr. Rogoff  … were arguing that financial crises led to slumps that were longer and deeper than other recessions.

Almost inevitably … policy makers battling a crisis made the mistake of thinking that their crisis would not be as bad as previous ones.

Obama advisers … knew the history … yet, of course,  they did repeat it.

By late 2008, the full depth of the crisis was not clear, but enough of it was.

A few prominent liberal economists were publicly predicting a long slump.

The Obama team, in private, discussed the Reinhart-Rogoff work.

So why didn’t that work do more to affect the team’s decisions?

Want more proof?

On 12/24/2008, USA Today published a piece titled: Forecasters share predictions for economy’s outlook in 2009

The punch lines:

If the recession continues past the spring, as many economists predict, it will be the most prolonged one since the Great Depression.

Employers are expected to continue to shed jobs at a rapid pace.

Consumers will pull back spending.

Businesses will cancel equipment purchases. Unsold, empty homes will dot city blocks.

I guess what Team Obama means is Goolsbee, Romer, and Bernstein didn’t see the severity.

Clinton’s claim of un-doability is just plain silly.

Reagan inherited a recession as severe as the one Obama inherited, plus 18% inflation.

He pulled the economy out in 1-term … so, there !

Team Obama seems to have a penchant for re-writing history.

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3 Responses to “No economist foresaw the severity of the recession … and no president could have done a better job … wrong and WRONG!”

  1. mpavey0 Says:

    Very interesting. Two questions:
    1) There seems to be some inconsistency between your two points. In support of point 1 you cite economists predicting the most prolonged recession since the Great Depression. Yet in point 2 you suggest that Reagan could have undone the recession in less than one term. Were the economists’ predictions based on the assumption of policy missteps? Or were the predictions simply wrong?
    2) What were the key ways in which Reagan did a better job? You seem to be suggesting the main thing Obama should have done was not to implement a stimulus package, is that correct?

  2. TK Says:

    Reagan’s recession was not nearly as deep. We lost more than twice as many jobs (as a percentage of peak employment) this time around. What measure are you using?

  3. TK Says:

    http://www.crgraphs.com/

    Employment graphs for all recessions since WWII

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