A Forecast That Sounds More Impressive Than It Is

August 29th, 2012 at 10:27 pm

Don’t know if this will make it into his speech tonight but I see where Rep Ryan is claiming that he and Mitt can create 12 million jobs.  Here’s some context for that.

That’s about what you’d expect in terms of job creation in a normal American job market over four years.  It sounds great right now—and “normal” would be great—given the job losses in the Great Recession and the slow growth since.  But if you just run a typical macro model under the assumption that the economy is back to its normal growth path, regardless of who’s in the White House, that’s about what you’d get.

The figure below, for example, is the Moody’s.com forecast, 2012-2016, which in fact predicts the growth of 12 million jobs over these years.   That’s about a 9% increase, about the same percentage gains as in each of the Clinton terms and over the second Reagan term.

I suspect people throw numbers like this around in hopes that they sound really impressive when what they’re really saying is “on our watch, the economy will perform as it normally does in expansions.”

I’m not saying that’s what’s going to happen, and I’m certainly not suggesting that Rom/Ry’s agenda will blaze the path back to normal levels of job growth.  To the extent that their supply-side tax cuts and deregulation generate results similar to those of the GW Bush years, they won’t get anywhere close.   But from what I can tell, they’re just looking at a typical model’s predictions—with no reference to their employment policy agenda—and claiming that’s what’s gonna happen.

Source: Moody’s.com, August forecast.

(Note: Interestingly, CBO has a considerably more pessimistic forecast, with slower job growth of only seven million, 2012-16.  Relative to the more standard, Moody’s-type forecast, they predict a slower climb out of the Great Recession over the next few years, and slower labor force growth which constrains both GDP and job growth.  Because the CBO does its projections under current laws on the books, they also have the fiscal cliff embedded in their projections, whereas Moody’s assumes we avoid the worst of it.)

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10 comments in reply to "A Forecast That Sounds More Impressive Than It Is"

  1. mike shupp says:

    Not exactly new…. In 1992, one of Bill Clinton’s claims was that 8 million jobs would be filled during his first term in office. And lo and behold!

  2. Kathleen Wright says:

    A pivotal point would be the distinction between creation of jobs versus addition of jobs. Mr Ryan and Mr Romney would happily create 12 million jobs…by privatizing that many existing public sector jobs. And they would balance the budget by cancelling the pension obligations to those who lost their jobs. They are awfully cheerful about making the world a worse place.

    • oli3 says:

      Bingo, Kathleen. Thanks for reminding us of that point.

    • Middle Molly says:

      Good point, but when we talk of jobs numbers as Mr. Bernstein is in this article, we’re usually discussing net jobs numbers including both the public and private sectors. So, if R and R are going to cut millions of jobs in the public sector, they’d have to make up those jobs in the private sector PLUS “create” the 12 million jobs they claim they can create in the private sector.

    • Amy says:

      How has Obama made things better? He let brazil and Mexico drill offshore and china reaps the benefits of that instead of us drilling off our own shores and lowering gas prices and creating more jobs. And, if you look at the jobs created as a whole, Obama only created 400,000 because just as many were lost. 50% more people are on welfare than before he came in to office…..

      • Mike says:

        Amy… When Obama took office, we were hemorrhaging jobs. It took months to stop the bleeding… most of the job loss during his administration was during those first several months. A bigger stimulus could have stopped the losses sooner and driven demand to bounce back, but the conservatives (both Republicans and “Blue Dog” Dems) fought to keep the stimulus as modest s possible, guaranteeing a slow turn-around.

        As for gas, gas is on a global market. We don’t get to keep gas drilled here, to use here. That’s not how it works.

  3. Holliday Vann says:

    Who knew?! Thanks again, Jared, for always breaking it down for those of us who regularly skipped Econ class at The Ohio State University!

  4. Mike Alexander says:

    12 million jobs is 250K per month over 4 years. We haven’t been printing such a number in recent times, and it is unlikley we will start doing ss later in this year with the fiscal cliff approaching. And after the cliff we certainly won’t do it in 2013, we wil likley fall deeper into the hole. And now Romney going to have to print 400,000 jobs over and over again to get anywhere. The idea that this is suddenly going to happen with the strutural problems in our economy and the shaky situation overseas is fantasy.

    It’s not like Romney can count on Democrats supporting his economy-boosting re-election strategy. To pursue it he’s going to need overwhelming Republican support for policy hateful to the Tea Party.

    Now its true that Tea Party Republicans fell into line behind Romney, but this was because they dislike Obama far more. But that shouldn’t stop them from supporting primary oppoenents to Representatives they sent to Washington who failed to hold fast against the growth of the debt. So can these Representative support what Romney knows he would have to do to get those 12 million jobs?

    I don’t think so, so the 12 million is unlikely the happen.

  5. Middle Molly says:

    We haven’t had 9% job growth over a four year period since the 1996-2000 period. That’s a long time ago. Over the past 42 years, going back to 1970, we’ve had at least 8.5% job growth over a four year period exactly 17 out of those 42 years. I would say that 9% job growth over 4 years is simply not normal now and it’s unclear if it will ever be normal again.

    And generally, Republicans in control of everything, the White House, the Senate and the House, has not brought the country much in the way of sustained job growth. In fact, both times in the last 90 years we’ve had Republicans in control of everything for at least four years, we’ve had an extremely serious economic crash shortly after that four year blitz.

    Job growth and Republicans everywhere simply don’t add up.

  6. AndyDD says:

    The Moody’s projection you cite is for less than 9 million jobs over a 5 year period, including 2016.

    I am fairly certain that Romney’s “promise” was for his first FOUR year term. That would require an average of 250K jobs per month, month after month. I don’t believe that pace of job creation has ever happened during a four year period. It is 66% greater than Moody’s estimates. I disagree that it is “about what you’d expect in terms of job creation in a normal American job market,” and you do not cite any past employment data to back up your dismissive claim.

    In light of both domestic and global economic conditions, it would truly be “impressive” if Romney accomplished this.