U.S. Economy

[docdru]

Spin the Payrolls

By PAUL KRUGMAN

Published: August 10, 2004

When Friday's dismal job report was released, traders in the Chicago pit began chanting, "Kerry, Kerry." But apologists for President Bush's economic policies are frantically spinning the bad news. Here's a guide to their techniques.

First, they talk about recent increases in the number of jobs, not the fact that payroll employment is still far below its previous peak, and even further below anything one could call full employment. Because job growth has finally turned positive, some economists (who probably know better) claim that prosperity has returned - and some partisans have even claimed that we have the best economy in 20 years.

But job growth, by itself, says nothing about prosperity: growth can be higher in a bad year than a good year, if the bad year follows a terrible year while the good year follows another good year. I've drawn a chart of job growth for the 1930's; there was rapid nonfarm job growth (8.1 percent) in 1934, a year of mass unemployment and widespread misery - but that year was slightly less terrible than 1933.

So have we returned to prosperity? No: jobs are harder to find, by any measure, than they were at any point during Bill Clinton's second term. The job situation might have improved somewhat in the past year, but it's still not good.

Second, the apologists give numbers without context. President Bush boasts about 1.5 million new jobs over the past 11 months. Yet this was barely enough to keep up with population growth, and it's worse than any 11-month stretch during the Clinton years.

Third, they cherry-pick any good numbers they can find.

The shocking news that the economy added only 32,000 jobs in July comes from payroll data. Experts say what Alan Greenspan said in February: "Everything we've looked at suggests that it's the payroll data which are the series which you have to follow." Another measure of employment, from the household survey, fluctuates erratically; for example, it fell by 265,000 in February, a result nobody believes. Yet because July's household number was good, suddenly administration officials were telling reporters to look at that number, not the more reliable payroll data.

By the way, over the longer term all the available data tell the same story: the job situation deteriorated drastically between early 2001 and the summer of 2003, and has, at best, improved modestly since then.

Fourth, apologists try to shift the blame. Officials often claim, falsely, that the 2001 recession began under Bill Clinton, or at least that it was somehow his fault. But even if you attribute the eight-month recession that began in March 2001 to Mr. Clinton - a very dubious proposition - job loss during the recession wasn't exceptionally severe. The reason the employment picture looks so bad now is the unprecedented weakness of job growth in the subsequent recovery.

Nor is it plausible to continue attributing poor economic performance to terrorism, three years after 9/11. Bear in mind that in the 2002 Economic Report of the President, the administration's own economists predicted full recovery by 2004, with payroll employment rising to 138 million, 7 million more than the actual number.

Finally, many apologists have returned to that old standby: the claim that presidents don't control the economy. But that's not what the administration said when selling its tax policies. Last year's tax cut was officially named the Jobs and Growth Tax Relief Reconciliation Act of 2003 - and administration economists provided a glowing projection of the job growth that would follow the bill's passage. That projection has, needless to say, proved to be wildly overoptimistic.

What we've just seen is as clear a test of trickledown economics as we're ever likely to get. Twice, in 2001 and in 2003, the administration insisted that a tax cut heavily tilted toward the affluent was just what the economy needed. Officials brushed aside pleas to give relief instead to lower- and middle-income families, who would be more likely to spend the money, and to cash-strapped state and local governments. Given the actual results - huge deficits, but minimal job growth - don't you wish the administration had listened to that advice?

Oh, and on a nonpolitical note: even before Friday's grim report on jobs, I was puzzled by Mr. Greenspan's eagerness to start raising interest rates. Now I don't understand his policy at all.

http://www.nytimes.com/2004/08/10/opinion/10krugman.html?n=Top%2fOpinion%2fEditorials%20and%20Op%2dEd%2fOp%2dEd%2fColumnists%2fPaul%20Krugman

[Kilmer17]

You're using Paul Krugman?

par the course with you.

[Cskin]

Typical.... "the sky is falling.. the sky is falling" from the left.

[rdsknbill]

Seems like a good time to buy into the market a little more

[jbooma]

docdru get off the computer stop reading newspapers and go out and find out the truth figure out why realtors are making money hand over foot, why companies are hiring etc...

also realize that job report doesn't mention anything about the new 600K workers in companies that are less then 2 years old and private contractors, but then again you do research right, that is your claim to fame

[docdru]

Originally posted by Kilmer17

You're using Paul Krugman?

par the course with you.

http://www.nytimes.com/ref/opinion/KRUGMAN-BIO.html

Columnist Biography: Paul Krugman

Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed Page and continues as professor of Economics and International Affairs at Princeton University.

Mr. Krugman received his B.A. from Yale University in 1974 and his Ph.D. from MIT in 1977. He has taught at Yale, MIT and Stanford. At MIT he became the Ford International Professor of Economics.

Mr. Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes. His professional reputation rests largely on work in international trade and finance; he is one of the founders of the "new trade theory," a major rethinking of the theory of international trade. In recognition of that work, in 1991 the American Economic Association awarded him its John Bates Clark medal, a prize given every two years to "that economist under forty who is adjudged to have made a significant contribution to economic knowledge." Mr. Krugman's current academic research is focused on economic and currency crises.

At the same time, Mr. Krugman has written extensively for a broader public audience. Some of his recent articles on economic issues, originally published in Foreign Affairs, Harvard Business Review, Scientific American and other journals, are reprinted in Pop Internationalism and The Accidental Theorist.

[flashback]

We need a smiley with his fingers in his ears going "lalalalalalalala, I can't hear you!!" for you guys.

Kilmer, if you have no way to refute Krugman's assertions, why are you wasting everybody's time in here?

Cskin, did you read the article? Its about strategies the right are using to spin the bad economic report. Why don't you read it, and try to come up with a more relevant comment?

[docdru]

Originally posted by jbooma

docdru get off the computer stop reading newspapers and go out and find out the truth figure out why realtors are making money hand over foot, why companies are hiring etc...

also realize that job report doesn't mention anything about the new 600K workers in companies that are less then 2 years old and private contractors, but then again you do research right, that is your claim to fame

I don't claim to be an economist, and I admit I've never researched the economy. But somehow I doubt that either you or Kilmer know even a fraction of what an actual economist does about the current state of the U.S. economy. I'm as critical an the next guy about the media, but it's pure hubris to assume that you know from your own observations the actual state of the U.S. economy.

[Kilmer17]

Much the same way the leftys dismiss anything from Newsmax and WorldNetDaily or Drudge.

Krugman is as far left as they get.

[Hitman56]

Nobody is hiring. Just try and find a job that doesn't involve asking, "would you like fries with that?"

Regardless of who says it, Bush is on pace to become the only prez since Hoover to lose jobs during his term.

[docdru]

Originally posted by Kilmer17

Much the same way the leftys dismiss anything from Newsmax and WorldNetDaily or Drudge.

Krugman is as far left as they get.

Not true. Perhaps that statement holds true for some social issues. But economically, he's quite moderate. There's nothing radical or extreme about his economics.

[ballplaya0]

Originally posted by docdru

I don't claim to be an economist, and I admit I've never researched the economy. But somehow I doubt that either you or Kilmer know even a fraction of what an actual economist does about the current state of the U.S. economy. I'm as critical an the next guy about the media, but it's pure hubris to assume that you know from your own observations the actual state of the U.S. economy.

As someone trained in economics, I would like to add that Krugman's comments, while slightly political in nature, are generally accurate. The Fed's actions (raising rates) are indeed somewhat puzzling given the slow recovery but I guess inflation (and stagflation) are major concerns at this time.

[docdru]

The American Prospect, a very liberal magazine, ran a story in the mid-90s attacking Krugman for his support of Free Trade.

[jbooma]

Since the president's tax cut was fully implemented last May the unemployment rate has dropped rapidly from 6.3 percent to 5.6 percent today. Everyone knows this. It's one of the fastest declines in unemployment in decades. The problem is, this is a presidential-election year. Hence, improving economic statistics will not be accepted by the mainstream media no matter what those statistics say.

The Bush bashers on radio and television have been saying that unemployment doesn't matter; that its payroll jobs that count. Lou Dobbs, host of CNN's Moneyline, recently said this while debating Steve Forbes on the air. Forbes cited the growth in jobs under the household survey, the survey used to determine the unemployment rate. Dobbs countered, "Who uses the household survey anyway?" The answer, Lou, is that up until the household survey started to show good news, you and almost every other financial journalist in America used it.

Remember how business and financial reporters measured the health of the job market back in the '70s, '80s, and '90s? Right. They used the unemployment rate. In the 1970s they invented a statistic called the "misery index" which added the inflation rate with the (yes, you guessed it) unemployment rate. During the deep recession which occurred between 1981 and '82, before the Reagan tax cuts were officially implemented, the Gipper was hammered with "high unemployment" rates. During the recession of '91, Bill Clinton, by way of a willing media, was able to attack George Herbert Walker Bush using unemployment rates that hovered around 7 percent.

The point here is that the nation has historically focused on the unemployment rate when it comes to measuring the health of the jobs market. All of a sudden, however — just when the unemployment statistics have given us an unbroken series of good tidings — we've seen a switch to the importance of the payroll jobs survey as the preferred metric of the labor climate.

[jbooma]

Originally posted by ballplaya0

The Fed's actions (raising rates) are indeed somewhat puzzling given the slow recovery but I guess inflation (and stagflation) are major concerns at this time.

That is the main reason why they are doing it especially with oil prices where they are at, they don't want everything to start jumping or it could hurt the economy.

[Cskin]

Cskin, did you read the article? Its about strategies the right are using to spin the bad economic report. Why don't you read it, and try to come up with a more relevant comment?

How do you know I didn't read it Flashback. My comment is based on the REAL WORLD, where I live and see the effects of a rebounding economy everyday. You see... I own a business.... so I'm the first to know when the economy is sagging of is picking up steam. I see companies hiring... I see companies buying IT infrastructure.... I see Real Estate agents selling homes.... I see home builders, many my friends, not being able to keep up with the deman for housing here in Central Virgina.

That article is typical Liberal Left cherry picking the BAD from the data and spouting off about the worst economy since the depression. At least that's what Donna Brazille says on the weekend Liberal Laugh Offs.

Sure the Repubs are going to cherry pick the good data... the signs of encourgagement and areas of improving data.

Next time you ask whether a poster has read something... first make sure you've read it yourself and could expound on it instead of regurgitating the Liberal Left talking points you received in your e-mail this morning. Furthermore... .couple this article with reality based on your experience at the business level... what you see as factors to support you opinion... than get back to me with a thought of your own.

[docdru]

For those of you wondering, that wonderful little diatribe was not a Jbooma original. It was published in the National Review (a right wing magazine) on March 6, 2004. Here's the link:

http://www.renewamerica.us/columns/bowyer/040306

"Jerry Bowyer is a Pennsylvania radio and television talk show host. He is the morning host on WPTT Radio in Pittsburgh, and he also hosts Pennsylvania Newsmakers, Pennsylvania's premier public affairs television program."

Jerry is a radio talk show host, he is not a trained economist.

I guess we all now know where Jbooma gets his real world "research" from.....the National Review. Stop reading the newspapers, read the National Review, and pawn it off as original thought.

Jbooma, what you just did is called plagiarism. It's dishonest.

[jbooma]

Originally posted by docdru

Jbooma, what you just did is called plagiarism. It's dishonest.

who said i claimed it to be mine :doh: you really need some help

[SnyderShrugged]

Originally posted by ballplaya0

As someone trained in economics, I would like to add that Krugman's comments, while slightly political in nature, are generally accurate. The Fed's actions (raising rates) are indeed somewhat puzzling given the slow recovery but I guess inflation (and stagflation) are major concerns at this time.

I think Greenspans motivation is to send a message of positive nature to spur Consumer Confidence. It sends a huge message to analysts and investors that the economy is strong when the Fed bumps up rates. If it werent for oil fears right now, the stock market would have proven this as the motivation. Look back to periods where other rate hikes happened. Normally it was seen as a strength indicator and the market adjusted accordingly.

Also, this small hike in rates is nothing compared to how low they have been overall for a long period of time.

It's encourageing to know that the FEd has conficence enough to allow slow economic adjustment to balance things back to "normal"

[jbooma]

Originally posted by docdru

I guess we all now know where Jbooma gets his real world "research" from.....the National Review. Stop reading the newspapers, read the National Review, and pawn it off as original thought.

Jbooma, what you just did is called plagiarism. It's dishonest.

You are not a good detective that is for sure :laugh: Honestly I never read that. I think we need to change how kids get in to college, with your brain power I don't know how you got into Stanford sometimes.

[docdru]

Originally posted by jbooma

You are not a good detective that is for sure :laugh: Honestly I never read that. I think we need to change how kids get in to college, with your brain power I don't know how you got into Stanford sometimes.

So what you're saying is that the post you just made, and tried to pawn off as your own original thought (which is evidenced by the lack of any citation) which is WORD for WORD from an article originally published in the National Review, you've never read. If you never read the National Review, how is it that you managed to swipe the article. Or do you just read national review articles only after they're posted on rightwing websites?

But you're right, you never read the National Review and you didn't try to pawn that off as your own. either you miraculously wrote word for word the same thing, or you posted the article in earnest off of some right wing web site.

How's my detective skills now? You got caught Jbooma. Admit it.

[ballplaya0]

Originally posted by skin-n-vegas

I think Greenspans motivation is to send a message of positive nature to spur Consumer Confidence. It sends a huge message to analysts and investors that the economy is strong when the Fed bumps up rates. If it werent for oil fears right now, the stock market would have proven this as the motivation. Look back to periods where other rate hikes happened. Normally it was seen as a strength indicator and the market adjusted accordingly.

Also, this small hike in rates is nothing compared to how low they have been overall for a long period of time.

It's encourageing to know that the FEd has conficence enough to allow slow economic adjustment to balance things back to "normal"

Everyone knows that the primary driving factor behind the inflation we have been experiencing is rising oil prices. However, if the Fed hoped to "send a message of positive nature to spur Consumer Confidence" he may have been better off leaving rates alone. Tighter monetary policy will surely not enhance consumer outlooks. It is clear that Greenspan envisions economic growth and stability in the future. However, for economists, "the future" is often 6-12 months away, especially with regard to monetary policy.

Ultimately it boils down to a debate between psychological factors and economic factors and assessing how rationale human behavior is. It will be interesting to see what impact this decision will have going forward. I am sure the Fed could have waited a month or two and made the same decision then. As of now, I doubt any more hikes are on the horizon.

[jbooma]

Originally posted by docdru

So what you're saying is that the post you just made, and tried to pawn off as your own original thought (which is evidenced by the lack of any citation) which is WORD for WORD from an article originally published in the National Review, you've never read. If you never read the National Review, how is it that you managed to swipe the article. Or do you just read national review articles only after they're posted on rightwing websites?

But you're right, you never read the National Review and you didn't try to pawn that off as your own. either you miraculously wrote word for word the same thing, or you posted the article in earnest off of some right wing web site.

How's my detective skills now? You got caught Jbooma. Admit it.

We are on an internet message board, everyone on this board first off knows that I didn't type that except you for some reason. This isn't my thesis for my degree so I don't need to quote everything exactly. I just posted it up for discusion. Is the word "I" in there at all, no. I don't read the national review because I don't like to read slanted material, I like to keep an open mind. I guess you have never heard of Google, you should try it sometimes if you type in "unemployment rate in the 90s" you might be surprised what you find.

Didn't you say you do research and your family is all about research, man I feel for you I really do

[docdru]

Originally posted by jbooma

We are on an internet message board, everyone on this board first off knows that I didn't type that except you for some reason. This isn't my thesis for my degree so I don't need to quote everything exactly. I just posted it up for discusion. Is the word "I" in there at all, no. I don't read the national review because I don't like to read slanted material, I like to keep an open mind. I guess you have never heard of Google, you should try it sometimes if you type in "unemployment rate in the 90s" you might be surprised what you find.

Didn't you say you do research and your family is all about research, man I feel for you I really do

For you a guy who claims to not read slanted material you sure chose well.

And by the way, are you lecturing me about research when you just did a Google search? is that your real world research?

Again, I never claimed to be an economist so your Ad Hominem remark about my family is asinine. Thanks for your pity though, it's quite amusing.

[jbooma]

Originally posted by docdru

For you a guy who claims to not read slanted material you sure chose well.

And by the way, are you lecturing me about research when you just did a Google search? is that your real world research?

Again, I never claimed to be an economist so your Ad Hominem remark about my family is asinine. Thanks for your pity though, it's quite amusing.

OIC I couldn't tell did you say you were wrong

By the way most research is done by the internet now, maybe not google but you can find out anything about anyone online, and I do have personal experience with this since I work in a field that involves finding some of the "bad guys" on the internet.