The CBO keeps predicting a recovery that never comes

| February 11 2013
Christopher Cook

Take a look at this chart and explanation from Heritage, and then see the comments below:

 

In a way, you have to feel sorry for the CBO (Congressional Budget Office). First, they are stuck doing static analysis. They have to use the numbers that are in front of them; they may not make dynamic predictions based on how policies might affect people’s economic behavior. But policies are exactly what is wrong here. Barack Obama’s economic policies are so bad that one must conclude he is either well-meaning but completely ignorant of how economies actually work or he is setting out to destroy the U.S. economy. There really is no third explanation (though I am sure his supporters will readily offer something).

The reason we can say that with relative confidence is by looking at the an economic factor such as unemployment. Under normal circumstances, economic downturns occur, and employment recoveries begin within a relatively short time. As you will note from the charts (see below), our post-war downturn-to-recovery cycles all had one thing in common: They’ve all sorted themselves out within two to three years. The earlier ones had a deeper dip but a V-shaped (quicker) recovery. The more recent ones have had a much shallower dip but a slightly longer, U-shaped recovery. Obama’s “recovery,” on the other hand, is essentially nothing of the kind. It is closer to L-shaped. The dip was deep; we climbed out a little bit, but then we stagnated and now we’re stuck.

When making judgments about GDP growth or employment recoveries, the CBO is looking at previous recoveries and noting that with the exception of the Great Depression, recoveries came in fairly short order. They keep expecting this one to do the same, and it keeps denying them for a simple reason: Barack Obama is doing almost everything wrong. He and his cronies are like a tsunami for the business community—layering mandates upon regulations and frosting it all with a bitter buttercream of uncertainty. He sucks massive amounts of money out of the private economy (where it is productive) and pumps it into the public sector (where the only productivity it produces is for his political allies and his reelection campaign).

The CBO is in uncharted waters. Barack Obama’s economic madness has taken us all into mare incognitum. Tragically, the map that leads us out is clear, but no one in power seems willing or able to read it.

 

For more information, see . . .

Worst downturn, and slowest recovery, since Great Depression

Those of you who follow politics closely may have run across what has become a rather well-known graphic from Calculated Risk. It shows the comparative depth and duration of job losses associated with U.S. recessions—specifically, recessions post WWII.

 

In the Sherlock Holmes story “The Copper Beaches,” governess Miss Violet Hunter eventually becomes consumed with a desire to know what is behind her, as she sits daily with her back to the window, wearing the electric-blue dress. In much the same way, every time I saw this chart, I became consumed with a question: What would it looked like if it showed the downturn so conspicuously absent: The Great Depression.

Several months ago, I contacted Bill, the man behind the chart, and asked if he could make a version that included the Depression-era line. I thought it would be most effective if the new chart were of the same source, style, and appearance as the earlier one that people have come to know. After a time and another communication, Bill (a terrific fellow, by the way, with great intellectual curiosity and integrity) made a new post on the subject.

It it, he provides a chart that compares the Great Recession with the Great Depression:

 

This is instructive, in that it shows just how bad the Great Depression was. The numbers for the Depression are not as accurate as those based on the better information that we have now, so the chart is rougher, but it gets the job done.

That said, I still wanted to see a chart with all the data on it, so—being the pest that I am—I asked again, and Bill very kindly obliged. (To my knowledge, this is the only version of this chart available, though that may have since changed):

 

We learn two things from this chart.

First, the Great Depression was far worse than any other downturn.

But second—and this is reason I wanted this chart so much—we see that the current period we are living through is inarguably the closest thing to the Depression in both levels and duration of job loss.

Think about this very carefully for a moment. Barack Obama wants to be reelected. Putatively, we are in a recovery, and yet look at the state of jobs. Other presidents have risen and fallen on much smaller downturns in employment.

And yet, America may be prepared to give President Obama credit for any “improvement” we are experiencing. If so, we would be looking at a repeat of 1936, where a president whose policies had prolonged the misery of millions of Americans was reelected based on the notion that things were “improving.”

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