Tuesday, April 10, 2012

The Bush Boom?

Spencer seems to be an Angry Bear over some chart from Greg Mankiw – and maybe he should be:

I see that his blog Mankiw shows a chart of the employment population ratio to make a comment about the "so called recovery". But he selected the start date of the chart so that you could not see that during the eight years of the Bush administration the employment-population fell from 63.0 to 60.3, a 2.7 drop. Since Obama took office the employment-population fell from 60.3 to 58.6, a 1.7 drop. The ratio has done poorly under both administrations, but people who live in glass houses should be careful about throwing rocks.

Our graph of the employment to population ratio goes from January 1998 to December 2008. It actually shows that the employment to population ratio when Bush took office was 64.4%. Of course we had a recession right after that followed by a recovery that managed to get this ratio back to 63.4% before the Great Recession that started in December 2007 leading to a collapse in the employment to population. Neither economic growth nor employment did all that well during Bush’s Presidency and yet the usual suspects are hanging out at the Bush Institute lecturing to us about how their policies might someday magically lead to 4% long-term growth.

But let’s be honest – this is an awfully slow recovery. I would argue the reason for this is a lack of fiscal stimulus as demonstrated in our first graph showing real government purchases. Of course, Team Republican wants us to believe that we have too much government spending. I wish one of the actual economists on Team Republican would be candid enough to admit that days after Barack Obama was elected President he called for a much more vigorous stimulus policy only to find that Mitch McConnell would choose to filibuster this proposal to death. Then again – such honesty would get one kicked off Team Republican.

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