Matthew Dowd, “a former strategist for President George W. Bush who lives south of Austin, was the subject of PolitiFact’s factcheck when he stated during the December 12, 2010 edition of ABC’s This Week with Christiane Amanpour: "Barack Obama is in an economy that's only worsened since he's been president of the United States.”
So PolitiFact supposedly starts sifting through a “wealth of statistics” it says it has available to reach the conclusion that Matthew Dowd’s statement merited a ruling of Half True….because, according to writer Louis Jacobson, half the statistics say the economy’s been improving, while half say it is not.
According to them, the most important statistical measure is job growth. But Obama has been president just a tad short of two years. This was one of the worst economic crashes in our nation’s history short of the Great Depression. Just when should job growth start to recover, or how long should it take? Is it too soon to give this statistic such weight?
The chart above “Post Recession Rate of Job Growth” from the U.S. Bureau of Labor Statistics, shows that in the last recession which started in 2001, it took 36 months from the end of the recession to recover to pre-recession employment growth. It was roughly double the length of time from the previous recession (1990-1, 18 months), which was roughly double the length of the previous one to that (1980-2, 9 months). As noted in the link (emphasis added):
The question then becomes, what does previous experience imply for the path of employment after the current recession? If the current recession ended today with a 2.7 percent job decline, and post-recession employment growth resembled the recovery from the 1981–82 recession, then employment would return to pre-recessionary levels in approximately 14 months. But if the employment growth path is more similar to the two most recent recessions, then it would take well over eight years for employment to return to prerecession levels. Of course, history is unlikely to repeat itself exactly, but what history does tell us is that the employment recovery will lag the recovery in overall economic activity, and possibly by a lot.
My “roughly double” analogy would make job growth recovery 72 months or six years for this economic cycle, while the analysis above says it could be over eight years….and because it always lags, it just doesn’t justify granting it such importance because there’s not enough time to know yet given the seriousness of this recession.
It should be added that job growth was essentially flat during Bush’s presidency….when the economy was “good.” So expecting job growth to suddenly “grow” when it’s been stagnating for a decade, even during a fairly strong economy, is an almost impossible order to fill.
Louis Jacobson also includes the housing market and personal bankruptcies in the “gotten worse” category. However, the causes of this recession centered around the housing industry. While the housing market was affected in certain regions in 1980-82, it was nothing like what happened this time. And because it was such a huge factor and affected so many and directly related to how banks and lenders made loans for houses, it only followed that there would be more bankruptcies. From a mathematical standpoint, in 1980 the housing market may have dropped 10%, but this time it dropped 50% (or more). As many stock market advisors will tell you, if you buy a stock and it loses 50% of its value, it has to double (go up 100%) for you to recover your investment. The consequences were so severe, it is no wonder the housing market has been so adversely affected, and it is way too soon to be able to tell when it will start really recovering.
So basically PolitiFact decides that this is enough evidence—when there clearly isn’t enough—to make Dowd’s statement Half True. It was too premature given the statistical information accumulated to rely on job growth/housing/bankruptcy stats to give a certain reading of the economy—but it unquestionably was not worsening. Other stats—GDP, income levels, the stock market, indicate the economy is growing very slowly or at least is in a holding position. On top of that, most of the experts Jacobson talks with are from either conservative or libertarian institutions, who would undoubtedly be in the “Democratic economic policy doesn’t work” camp.
In a word my conservative counterpart often uses, PolitiFact was a little too *charitable* in its interpretation of Matthew Dowd’s statement for this ruling. The underlying timing factors, and the severity of the causes of this recession were not properly considered. In other words, choosing which statistics and how they would be judged in evaluating the truth of this statement was...a biased selection! (OMG!) This is one of those “let’s play politics” damnable statements: if this had been President McCain under identical circumstances Dowd’s statement might have been: “Americans are grateful that because of John McCain our economy is headed in the right direction” and PolitiFact would probably have rated it True or Mostly True. Shame on them.
No comments:
Post a Comment