“By this estimate, the Recovery Act has met the president’s goal of saving or creating 3.5 million jobs — two quarters earlier than anticipated,” Romer said with a straight face. (More than 2.5 million non-farm jobs have been lost since ARRA was enacted in February 2009, all of them in the private sector, according to the Bureau of Labor Statistics.)
How does the CEA arrive at these numbers? It uses two methods, Romer said. The first is a standard macroeconomic forecasting model that estimates the multiplier effect of fiscal policy. (The government’s spending is someone else’s income.) The second method is statistical, using previous relationships between GDP and employment to project future behavior.
These numbers might just as well have been pulled out of a hat. Recall that it was the same model and method the administration used in January 2009 to predict an unemployment rate of 7 percent in the fourth quarter of 2010 with the enactment of the fiscal stimulus and 8.8 percent without. The unemployment rate now stands at 9.5 percent.
Update: Michael Boskin chimes in on the same theme, calling them Obama’s Economic Fish Stories.
[blockquote]The expectation of future spending and future tax hikes to pay for the stimulus and Mr. Obama’s vast expansion of government are offsetting the direct short-run expansionary effect. That is standard in all macroeconomic theories.
So, as I and others warned in 2008, the permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times. Worse yet, all the subsidies, bailouts, regulations and mandates are forcing noncommercial decisions on the economy, which now awaits literally thousands of new diktats as a result of things like ObamaCare and the financial reform bill. The uncertainty is impeding investment and hiring.[/blockquote]
For example all businesses will now have to file a Form 1099 for all goods and services purchased over $600. This can easily run into thousands of forms per business filed each year.
We are from the government and we are here to help you. We need more pencil-pushers (or these days, keyboarders) to say the unemployment rate is decreased. See, it all works out to rank(ed) socialism imposed by the elite for the elite in the name of ralph and john q. publick.