You may have recently seen the new chart put out by the Obama administration pushing the idea that the President’s policies are responsible for the decrease in newly unemployed. It looks something exactly like this:
Now… as a piece of visual political propaganda, this is brilliant. The colors draw sharp contrast, the symmetry is appealing. And the numbers are right.
But keep in mind how carefully I phrased the units being used “decrease in newly unemployed”. This isn’t an increase in jobs or a decrease in unemployment. It just means that we’re losing jobs slower that we were before.
Make no mistake… this is good news. And we can bicker back and forth as to whether President Obama’s policies are responsible for this slowdown in newly lost jobs. He would say yes and point to the stimulus.
But in order to point effectively to the stimulus, we would have to take a look at the expectations of the stimulus. Everyone expected that we would come out of the recession eventually and that job loss would slow. The question was how quickly that would happen.
To help us visualize the expectations of the stimulus against the reality of it, I’ve added that piece of context to the graph. See if you can spot it.
I got these numbers by multiplying the labor force by the expected unemployment rate with the stimulus (per this chart) and then subtracting that number from the labor force times the actual unemployment rate.
One may say that this is unfair. I would actually kind of agree. Economic predictions are pretty hard to make. But the original chart is similarly unfair. Keep in mind that it took a few months to get the stimulus money out the door. In fact, they didn’t even release any data on the stimulus funds for second quarter 2009 (the first stimulus report was for third quarter 2009).
Side Note: This data has actually been scrubbed from the website. They’ve re-compiled the data into new categories. But I’m wary about trusting the data since it looks like, according to the official data, about $12 billion of the stimulus was spent before the stimulus was signed with projects being approved as early as 2000.
So the first several months of decline don’t even reflect the impact of the stimulus. The decline in new job losses seems to be just a happy coincidence that looks good on a chart.