Tom Blumer on GDP, recession, and the NBER

Tom Blumer, posting at PJM, tries to blame the Democratic party for the economic mistakes of the Bush administration.

I tested the waters to see how he would respond to having holes poked in his "bubble". Here's a sample of my response:

Tom,

You really need to do a better job if you want to deflect the blame for our failing economy to Obama. Such a “Big Lie” is going to take a lot more than an easily rebutted opinion piece.

The mislabeled “stimulus” will, if it passes, almost certainly extend the conditions we saw during the last half of 2008. Much more of this, and regardless of what NBER says, we’ll soon be thinking of 2008’s first half as “the good old days.”

I see this same argument repeated over and over by right wing blogs. It’s almost like you didn’t even read the revised employment figures you posted. The first half of 2008 we lost almost 800,000 jobs. A little GDP growth means nothing when the “fundamentals” are dropping through the floor. You note revised figures show that “the NBER claims that the recession started in December 2007, in a month when the economy added 120,000 jobs.” What you fail to take into account is that the revised numbers also show larger job losses before and after the 4Q2007.

Somehow I am inclined to believe the Congressional Budget Office is a more neutral source on how well the stimulus will work:


By CBO’s estimation, in the short run the stimulus legislation would raise GDP
and increase employment by adding to aggregate demand and thereby boosting the
utilization of labor and capital that would otherwise be unused because the economy is
in recession.
…
Taking all of the short- and long-run effects into account, CBO estimates that the
legislation implies an increase in GDP relative to the agency’s baseline forecast of
between 1.4 percent and 3.8 percent by the fourth quarter of 2009, between 1.1 percent
and 3.3 percent by the fourth quarter of 2010, between 0.4 percent and 1.3 percent by
the fourth quarter of 2011
…
Correspondingly, the legislation would increase employment by 0.8 million to 2.3
million by the fourth quarter of 2009, by 1.2 million to 3.6 million by the fourth quarter
of 2010, by 0.6 million to 1.9 million by the fourth quarter of 2011
…
I hope this information is helpful to you. If you have any further questions, I
would be glad to answer them. The staff contacts for the analysis are Ben Page
and Robert Arnold, who may be reached at (202) 226-2750.

From NBER:

The committee determined that the decline in economic activity in 2008 met the standard for a recession… All evidence other than the ambiguous movements of the quarterly product-side measure of domestic production confirmed that conclusion. Many of these indicators, including monthly data on the largest component of GDP, consumption, have declined sharply in recent months.
…
Real manufacturing and wholesale-retail trade sales reached a well-defined peak in October 2007.

You claim that “Democrats Halted Recovery”, but there was never any recovery to halt. The housing market is in freefall because of the bubble that grew under Bush & Greenspan’s easy money policies, and the credit markets have seized up for much the same reason. The large bulk of the economic damage was due to holding interest rates below historically verified optimums, driving an over-investment in real estate. The period 2003-2005 is where this policy did the most damage. To prove that the economy was derailed in the summer of 2008, you would need to show that it was getting back on track - but there is no evidence here to show that. In fact, the revised figures point to a more severe downturn in employment in mid-2007, and accelerated losses throughout 2008.

Revisionist history is all the rage on the right these days, but trying to revise history less than two years old is asinine.