42 Straight Months of Stupidly Optimistic Official Predictions About Economic Recovery
Once-a-month quotes from the Obama administration and the media about how the economy will be booming any minute now.
Washington economic experts have been proclaiming that economic recovery is right around the corner since before they were sure the patient was sick.
For those of us who have been saying all along that none of the economic interventions since 2007 would revive the economy—not the rescue of Bear Stearns and other financial institutions; not the Troubled Asset Relief Program; not the American Recovery and Reinvestment Act; not Quantitative Easings I, II, and III; not the Patient Protection and Affordable Care Act; not Cash for Clunkers or Solyndra or the bailouts of Chrysler and General Motors—the cavalcade of wrongheaded, fantastical economic analysis coming out of official Washington and its media in recent years would be hilarious if it were not so infuriating.
The granddaddy of these economic inanities is Federal Reserve Bank chairman Ben Bernanke's March 2009 declaration that he could see economic "green shoots":
I think as those green shoots begin to appear in different markets and as some confidence begins to come back, that will begin the positive dynamic that brings our economy back.
With the benefit of hindsight it's easy to laugh at Bernanke, and some folks have been known to do so.
Trillions of dollars have been spent on monetary expansion and economic recovery since the beginning of the Obama administration. At least a trillion had already been spent before President Barack Obama was sworn in.
Throughout that period, headline unemployment has exceeded predictions every single month, growing from 7.3 percent to 8.2 percent (and topping 10 percent during the period when the Recovery Act's purported benefits were at their peak). Labor force non-participation (that is, work-eligible Americans who have left the workforce entirely and now are not even counted in unemployment statistics) has climbed from 34.3 percent to 36.2 percent. Contrary to both Keynesian and monetary theory, this period of flat growth has been accompanied by pronounced Consumer Price Index inflation that has robbed your dollar of 10 percent of its value since 2007.
Here's a far-from-exhaustive list (we could have filled every month's quota using nothing but gaffes from Vice President Joe Biden) of insane, disinformed, spectacularly wrong statements from Obama's ever-shrinking brain trust, with a sprinkling of mots justes from the commentariat.
One quote per month, followed by that month's rate of U-3 unemployment and labor force non-participation:
January 10, 2009: Council of Economic Advisers Chair-designate Christina Romer and Jared Bernstein, economic advisor to Vice President-Elect Joe Biden: "As Figure 1 shows, even with the large prototypical (stimulus) package, the unemployment rate in 2010Q4 is predicted to be approximately 7.0%, which is well below the approximately 8.8% that would result in the absence of a plan." (Unemployment 7.8 percent, labor force non-participation 34.3 percent)
February 25, 2009: Vice President Joe Biden: "We have an opportunity to get the nation back to work and back on its feet….And we have to do it right." (8.3 percent, 34.3 percent)
March 15, 2009: Federal Reserve chairman Ben Bernanke: "We'll see the recession coming to an end probably this year." (8.7 percent, 34.4 percent)
April 14, 2009: President Barack Obama: "[W]e are beginning to see glimmers of hope." (8.9 percent, 34.4 percent)
May 18, 2009: CNNMoney: "Job recovery may be on the way." (9.4 percent, 34.3 percent)
June 9, 2009: NewGeography.com: "There are plenty of reasons that Krugman and others are seeing encouraging signs in the economy." (9.5 percent, 34.3 percent)
July 14, 2009: Secretary of the Treasury Tim Geithner: "The force of the global recession is now receding." (9.5 percent, 34.5 percent)
August 4, 2009: Boston Globe: "Vice President Joe Biden, put in charge of keeping waste and fraud out of the $787 billion economic stimulus package, declared today 'without reservation' that the recovery plan is working." (9.6 percent, 34.6 percent)
September 24, 2009: CNN: "Biden on the Recovery Act: 'If It Fails, I'm Dead'" (9.8 percent, 34.9 percent)
October 31, 2009: President Barack Obama: "I am pleased to offer some better news that—while not cause for celebration—is certainly reason to believe that we are moving in the right direction." (10 percent, 34.9 percent)
November 13, 2009: Secretary of the Treasury Tim Geithner: "We are seeing growth resume in the United States." (9.9 percent, 35 percent)
December 13, 2009: Larry Summers, director of the National Economic Council: "Today, everybody agrees that the recession is over, and the question is what the pace of the expansion is going to be." (9.9 percent, 35.4 percent)
January 27, 2010: President Barack Obama: "And after two years of recession, the economy is growing again." (9.7 percent, 35.2 percent)
February 1, 2010: Office of Management and Budget Director Peter Orszag: "We just came through a year in which a second Great Depression was averted." (9.8 percent, 35.1 percent)
March 15, 2010: John Cassidy, The New Yorker: "Economists are still debating what it was that ended the financial crisis and turned the economy around. It is inarguable, though, that Geithner's stabilization plan has proved more effective than many observers expected." (9.8 percent, 35.1 percent)
April 27, 2010: Vice President Joe Biden: 04/27/10: "I'm absolutely confident that the policies that we put in place are sending the economy and the American public in the right direction." (9.9 percent, 34.9 percent)
May 6, 2010: Federal Reserve Bank of Richmond president Jeffrey M. Lacker: "The most likely scenario is for the recovery to strengthen further in coming months. That's the broad-brush view; now I would like to fill in the canvas with some details." (9.6 percent, 35.1 percent)
June 17, 2010: Deputy Secretary of Housing and Urban Development Ron Sims: "This summer is sure to be a Summer of Economic Recovery." (9.4 percent, 35.4 percent)
July 21, 2010: Federal Reserve Chairman Ben Bernanke: "The economic expansion that began in the middle of last year is proceeding at a moderate pace, supported by stimulative monetary and fiscal policies." (9.5 percent, 35.4 percent)
August 2, 2010: Secretary of the Treasury Tim Geithner: "Welcome to the recovery…The recession that began in late 2007 was extraordinarily severe, but the actions we took at its height to stimulate the economy helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery." (9.6 percent, 35.3 percent)
September 14, 2010: Ben Smith, Politico: "The Troubled Assets Relief Program … [has] succeeded far beyond expectations." (9.5 percent, 35.4 percent)
October 9, 2010: Secretary of the Treasury Tim Geithner: "Two years ago, the world economy was in the grip of an economic crisis on a scale not seen since the Great Depression. Together, we committed to and implemented an aggressive, unprecedented response to the crisis. That response calmed markets, stabilized and initiated reforms to our financial systems, and put the global economy on a path to growth." (9.5 percent, 35.6 percent)
November 9, 2010: Vice President Joe Biden: "The initiatives announced today are putting the Recovery Through Retrofit report's recommendations into action – giving American families the tools they need to invest in home energy upgrades." (9.8 percent, 35.5 percent)
December 16, 2010: Secretary of the Treasury Tim Geithner: "Thanks to a comprehensive and careful strategy to address the financial crisis, we are in a much stronger position to address our still very substantial remaining economic challenges." (9.4 percent, 35.7 percent)
January 25, 2011: President Barack Obama, State of the Union address: "We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again." (9.1 percent, 35.8 percent)
February 17, 2011: Vice President Joe Biden: "Through the Recovery Act, we've proved that the government can move quickly and get the job done and do it right." (9 percent, 35.8 percent)
March 4, 2011: President Barack Obama: "So our economy is now added 1.5 million private sector jobs over the last year, and that's progress." (8.9 percent, 35.8 percent)
April 13, 2011: President Barack Obama: "In this case, we took a series of emergency steps that saved millions of jobs, kept credit flowing, and provided working families extra money in their pocket." (9 percent, 35.8 percent)
May 28, 2011: Vice President Joe Biden: "Because of what we did, the auto industry is rising again. Manufacturing is coming back. And our economy is recovering and it's gaining traction." (9 percent, 35.8 percent)
June 5, 2011: Council of Economic Advisers chairman Austan Goolsbee: "OK, it is not a 'jobless recovery.' That is an incorrect phrase." (9.1 percent, 35.9 percent)
July 21, 2011: Obama spokesman Jay Carney: "That's why he is focused every day, he wakes up every day and goes to sleep every night thinking about the fact that he will not rest, he will not cease in his efforts to grow the economy and create jobs until he knows that every American who's looking for a job can find one. And that will undoubtedly remain true throughout his first term." (9.1 percent, 36 percent)
August 31, 2011: Former Biden economic advisor Jared Bernstein: "The evidence shows the stimulus (and other stimulative measures, including those of the Fed) worked, but ended too soon, before the private sector was ready to walk on its own. The evidence shows we need to do more of these sorts of policy interventions." (9.1 percent, 35.9 percent)
September 13, 2011: Director of the National Economic Council and Assistant to the President for Economic Policy Gene B. Sperling: "You just have to stay at it. You have to dig and keep digging, and stay at it, and try. Do more of what's working, less of what's not working, but for God's sakes stay at it until we get this recovery at a pace and a momentum that can start making a more serious dent in unemployment and a more positive impact on job creation." (9 percent, 35.9 percent)
October 18, 2011: Vice President Joe Biden: "The other thing I've heard from my friends who are opposed to this whole jobs bill is that this is just temporary. Well let me tell you: It's not temporary when that 911 call comes in and a woman's being raped and the cop shows up in time to prevent the rape. It's not temporary to that woman." (8.9 percent, 35.9 percent)
November 30, 2011: Acting Director of the Office of Management and Budget Jeffrey Zients: "This ['Federal Infrastructure Projects Dashboard'] is the latest result of a series of executive actions President Obama has taken to create jobs because he is adamant that we can't wait for Congress to act to boost job growth and strengthen our economy." (8.7 percent, 36 percent)
December 30, 2011: Matthew Yglesias, economics columnist for Slate: "Happy days are here again!" (8.5 percent, 36.0 percent)
January 6, 2012: Matt O'Brien, The New Republic: "This finally might be an economic recovery worthy of the name." (8.3 percent, 36.3 percent)
February 6, 2012: White House Press Secretary Jay Carney: "Let's look at some of the facts, which include that a large percentage of that [decline in labor force participation] is due to younger people getting more education, which in the end is an economic positive." (8.3 percent, 36.1 percent)
March 9, 2012: Ezra Klein's WonkBlog, The Washington Post: "There are also some reasons to think this recovery can sustain itself through 2012. Ever since the recession ended in mid-2009, the U.S. private sector has been consistently hiring workers." (8.2 percent, 36.2 percent)
April 26, 2012: Council of Economic Advisers Chairman Alan B. Krueger: "Expanding middle class jobs in manufacturing, especially advanced manufacturing, is part of the President's comprehensive strategy for reversing the middle-class jobs deficit." (8.1 percent, 36.4 percent)
May 6, 2012: Vice President Joe Biden: "Look, this goes up and down. But there's been a steady path—26 months straight employment gain, private employment." (8.2 percent, 36.2 percent)
June 8, 2012: President Barack Obama: "The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government." (June unemployment and labor force non-participation will be released next month. Unemployment applications climbed in mid-June and again in late June. The four-week average of new jobless claims is the highest it has been since December.)
And there you have it.
It is, of course, tempting to take the wayback machine to the beginning of the recession, and include some of Bernanke's Bush-era predictions of strength in the real estate market, or the panicked ravings of former Treasury Secretary Henry Paulson, or the encouraging, if inaccurate, jawboning of President George W. Bush. (Sample: "We will work with our partners to correct the problems in the global economic system, we will rebuild our economic strength, and we will continue to lead the world toward prosperity and peace."—November 13, 2008.)
But much as Obama seems to believe otherwise, Bush is not running for president this year, and it was Obama who rode into D.C. in January 2009 on a wave of hope, change, recovery, and reinvestment. So much for that.
Tim Cavanaugh is managing editor of Reason.com. Reason magazine Editor in Chief Matt Welch contributed to this article.
