Monday, August 6, 2012

DeLong Smackdown

Brad approvingly quotes Matthew O'Brien (HT - Bob Murphy): "Does the memory of most Americans go back a decade? If it does, then they can remember a more anemic recovery…. The post-2001 recovery had the slowest job growth of any postwar recovery. It also had the slowest private sector growth of any postwar recovery. It's puzzling that Hubbard doesn't remember this, considering that he was the chair of President George W. Bush's Council of Economic Advisors from 2001 to 2003."

And I suppose one can quote it approvingly as a technical matter. I'm sure O'Brien is exactly right on the numbers. We know private sector job growth has been not-entirely-horrible and that the real problem has been in the public sector. If you look at the data the return to 2% private job growth rates has been a little quicker this time than in the last recession:

FRED Graph

But something still bugs me about the claim...

Maybe the fact that the employment loss rate in the 2008 downturn was twice as big as in 2001 matters. Maybe the fact that our real GDP growth rate is back on trend while our real GDP level is well below trend matters, and perhaps O'Brien's citation of rates of change is obscuring the picture of an unemployment rate that actually went up recently.

Maybe Glenn Hubbard, for all his other faults, was right not to focus on the return of growth rates to trend (which was faster for private employment in 2000) and perhaps he was right to be thinking in terms of the return of levels to trend.

We put food on the table with levels, not rates, after all.

What's more frustrating about Brad's post for me is that it skips over the best part of O'Brien's article:

"Now, the economy did grow faster then than it has now. But that's because the government grew as much as it did then; it's shrinking now. Really."

When we have idiot covers like this on an allegedly prestigious magazine, this is the message that needs to be highlighted. Not the fact that private employment growth returned to around 2% a little bit faster after 2001 than after 2008:

Bartleby does not like putting smackdowns of admittedly insufferable Republicans before highlighting how bad this economy really is for the American people:


All anonymous comments will be deleted. Consistent pseudonyms are fine.