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On the Economy

The economy is improving whether conservatives like it or not

Conservatives who would like to bash Obama on the economy are having an awfully hard time right now, as the recovery proceeds apace.

By Jared BernsteinGuest blogger / February 10, 2012

Barack Obama speaks as he hosts the second White House Science Fair celebrating the student winners of a broad range of science, technology, engineering and math (STEM) competitions from across the country in Washington February 7, 2012. Bernstein argues that no matter how much conservatives would like to deny it, the economy is getting better under Obama.

Kevin Lamarque/Reuters/File

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As others have noted, conservatives who’d like to bash the President on the economy are having an awfully hard time right now, as the recovery proceeds apace.  Too slowly apace, for sure, but no objective observer can miss that the trend is our friend and that even the job market, while still far too weak and with conspicuous downsides (intractable long-term unemployment), is improving.

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Before joining the Center on Budget and Policy Priorities as a senior fellow, Jared was chief economist to Vice President Joseph Biden and executive director of the White House Task Force on the Middle Class. He is a contributor to MSNBC and CNBC and has written numerous books, including 'Crunch: Why Do I Feel So Squeezed?'

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So, they’re stuck with “yeah, things are getting better, but if we were in charge, they’d be even better!”

This, of course, is the flipside of a rap with which I’m intimately familiar: “sure, things are bad—but without our actions, they’d be even worse!”

Neither are convincing to most people, because most people don’t engage in the economist’s counterfactual: the path the economy would have taken absent your interventions.  It’s the “compared-to-what” in the above statements.

Thing is, I know and believe, within confidence intervals, my counterfactual.  It comes from tried and true modeling based on the historical relationships of how advanced economies respond to stimulus.

Or, if you don’t like that sort of thing, you can derive a counterfactual from simply projecting the course the economy was on before you did your policy thing, and compare that to the actual path of growth and jobs (you can see that approach here—see discussion around Table 3).  [Note: the fresh-water economists, who continue to willfully ignore critical lessons of our past, deeply disdain the Keynesian multiplier models—but I haven’t heard their objections to this other, much less theoretical approach, as in Table 3 in the above doc.]

What I don’t get is their counterfactual.  Other than unconvincingly waving hands, muttering how things should be better, how the EPA and OSHA rules are killing businesses, yada, yada—let’s see some analysis.

Gov Romney’s got real economists on his team.  If he wants to make the case that things would be better if we followed his plan—which actually looks pretty Hoover’esque to me—explicitly anti-stimulus re jobs and liquidate the housing market—let’s see the model.   True, most people won’t believe it anyway, but those of us familiar with counterfactual analysis would like to see if there’s anything there, or if this is just disgruntled smoke-blowing.

I’m not saying we–when I was with the admin–or the Federal Reserve got everything right by a long shot.  But what I don’t see is anything approaching a coherent argument about how things would be better otherwise.

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