In theory, theory is the same as practice

[unixronin]

In practice, it isn’t.

This chart (from the linked article) compares the Obama administration's projections for unemployment to actual observed data.

The projections:

• Without the stimulus plan (light blue line), unemployment starts to level out sometime between Q3-2009 and Q1-2010, peaks at a hair over 9% during Q1-2010 and Q2-2010, then begins to decline.

• With the stimulus plan (dark blue line), unemployment unemployment starts to level out in Q1-2009, peaks just below 8% in June 2009, and is declining by Q3-2009.

The reality:

May 2009 ended with unemployment just shy of 9.5%, with the curve still steepening.

“Oops.”

See also this article, which also notes that the unemployment rate has risen almost two points in four months, the highest job loss rate recorded since the beginning of US unemployment statistics in 1948.

Comments

[ithildae]

Always in motion, the future

Most Americans understand that you do not run up the credit card when you are out of work and money. Even if the public doesn't understand that, businesses do. I have already stated my feeling about supporting large businesses that are shedding jobs and value.

It seems that there is nothing more conservative than a liberal. The total effort and funds expended are to preserve the status quo. [cluestick] The status quo is what is broken,[/cluestick]

[skellington.livejournal.com]

So the question is what causes this difference?

Is this because the Obama people (and most everyone else in the economic forecasting business) can't forecast their way out of a paper-bag? (Note that the Fed's "stress test" on banks had the unemployment rate much lower as well.)

Is this because the Obama policies have made things worse?

Is this because the Obama policies have improved things, and the actual rate would be higher without the stimulus? (I can certainly point to certain state government jobs, including education jobs, that weren't cut because of the stimulus.)

[unixronin.livejournal.com]

There's no visible inflexion in the curve. I'd say that (a) the recession is much worse than Obama and his analysts thought, and (b) the stimulus plan has (so far at least) been mostly ineffective. Which, considering that so far most of the money has gone to banks who've either sat on it as a nest egg for when things get better or given it back because they don't like the conditions attached to it, hardly surprises me. It was a typical Washington solution.


I don't think the stimulus plan has made things worse in the short term (though in the long term, the gigantic increase in debt is really going to hurt us). So far though, I see little evidence that it's made it better either. The last I heard from the administration is the claim that the stimulus plan has created 100,000 to 150,000 jobs ... in almost six months. Unfortunately, we're losing those 150,000 jobs every ten days.

(Data point re education jobs: University of New Hampshire last week imposed a salary freeze, a hiring freeze, closed several dozen open positions, and laid off seven people, all in response to a $8.3 million budget cut. I'm given to understand several staff in the Gilford school district are taking early retirement. Education in Georgia may have benefited, but it doesn't look as though education in New Hampshire has.)

[skellington.livejournal.com]

I could be wrong, but I think the stimulus plan was not the part related to the banks. i.e. TARP, etc. were part of a different package.

And very little of the money has actually been distributed. (It only passed Congress 4.5 months ago; end of January.)

As for education jobs, I was mostly thinking about K-12 kind of jobs. Here in Georgia, many districts had been laying off part-time teachers, aides, and were asking for permission to raise their student-teacher ratios. Some of that has stopped with the additional federal funding.

[fruitylips.livejournal.com]

"And very little of the money has actually been distributed. (It only passed Congress 4.5 months ago; end of January.)"

This was always one of the biggest criticisms of the 'stimulus' package, since the entire point of a stimulus package is that the money needs to be spent *now* if it is going to be effective. Heck it was sold as critical to pass RIGHT FUCKING NOW without any real examination of the contents based on the idea that to be effective it had to be put into effect NOWNOWNOW!

Remember how we didn't have time for it to sit up on the web for examination for 5 days before the vote so people could check it out, like someone promised we'd do from now on?

What we got was nothing more than a slew of random Democrat wet dreams that largely gets spent in 12-24 months and on out into the future.

[unixronin.livejournal.com]

You're correct, I confused TARP and the stimulus for a moment.

[ithildae.livejournal.com]

Many of the stimulus conditions entail States taking on long term obligations, with short term Federal funding. Not good.

In Minnesota, our district closed two elementary schools and a middle school. Lots of staff reductions. The student/teacher will get better, but the remaining schools are packed.

[ithildae.livejournal.com]

The close of the Government Motors dealerships will wipe out 100,000-150,000 jobs.

[n5red.livejournal.com]

That does bring up the question of whether the unemployment rate would be any lower if McCain had won the election.

[gdmusumeci.livejournal.com]

Yeah, there is a lot being read into this. The only reasonable conclusion that can be drawn is "the forecasted figures, in both cases, were probably inaccurate." Economics is a bitch, film at 11....

[unixronin.livejournal.com]

Probably not, realistically. This has been building for a long time. It's beyond any short-term band-aid.

[ithildae.livejournal.com]

Will the new Federal deficit numbers keep unemployment high for a longer period? I doubt anyone could have prevented the crash. What are we using for a cushion so we can get back up faster? Unfortunately, it is all part of the path not traveled.