The Agenda

Zachary Goldfarb on the Interpretation of Economic Statistics

Zachary Goldfarb has written a thoughtful and even-handed piece for the Washington Post on the use and misuse of economic statistics, particularly by the news media. Consider the following:

Obama is fond of saying, as he did in this past week’s presidential debate, that the nation created 5.2 million jobs over the last 31 months during his term. This is a key argument in favor of his reelection, a description of what a recovery in the jobs market looks like. It is a big number, and it has problems.

The president is starting his count with the lowest low he can find. That is from February 2010, more than a year after he took office, and it includes only the private sector. In contrast, the public sector lost 537,000 jobs over the same period — a rich irony since the government has far more control over its own workforce than the private sector’s. And the number lacks context. Over 21 / 2 years, 5.2 million jobs isn’t that much — an average of 167,000per month — given how low we’d fallen. During Obama’s first full year in office, the economy lost far more jobs each month, an average of 356,000, for a total of 4.3 million. And that was on top of the 3.6 million jobs lost in 2008.

If the president chose a different baseline — Goldfarb suggests June of 2009, the official end of the recession — he would have to make a more modest claim:

During Obama’s tenure, the job market has climbed about halfway out of the economic abyss — perhaps a little more, perhaps a little less. But “my policies helped reverse half of the pain of the recession” is not a very effective debate line.

Goldfarb also discusses how the Romney campaign has shrewdly deployed economic statistics:

Romney plays a different game with jobs figures. He picks a really big number about the future of a really big economy and makes it sound, well, humongous. In Tuesday’s debate, Romney said his economic plan would generate 12 million jobs in four years. That sounds dramatic, especially in contrast to the lackluster job growth of the previous years.

But several top forecasters expect the economy to create that many jobs without any changes in policy — a good, but not spectacular, showing. If the economy continued to grow at its current, snail-like pace, it would probably add about 8 million jobs over the next four years. However, as the scars of the recession fade, the economy is likely to pick up speed. The Congressional Budget Office estimates 9.6 million jobs will be created; Moody’s Analytics suggests 12 million.

I’m biased, of course, but my sense is that Romney’s caution is well-placed. And I’ve been struck by the number of analysts who have claimed that his 12 million target is wildly unrealistic. 

Regardless, Goldfarb’s piece is well worth reading.


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