On June 13th, Mitt Romney policy director Lanhee Chen posted a blog on the Romney web site titled "Taxed and Spent: American Workers Suffering Under Obama". Following is the first paragraph:
President Obama’s policies have failed the American people. And nowhere has this failure been more evident than in this Administration’s handling of our nation’s economy. In the month that President Obama was inaugurated, the unemployment rate was 7.8%, the national debt stood at $10.6 trillion, and the average price for a gallon of gas was $1.83. Today, in the third year of his presidency, unemployment has ballooned to 9.1%, the national debt tops $14 trillion, and Americans are paying double—$3.70 a gallon—for gas.
Technically, the numbers appear to be correct. This page on the Federal Reserve web site shows that the employment rate was 7.8% on January 1st, 2009 and is 9.1% as of May 1st, 2011. However, note that the unemployment rate reached 9.4% in May, just 4 months after Obama was inaugurated and reached the maximum of 10.1% in October, just 9 months after. As I previously discussed at this link, it likely makes far more sense to allow some time lag for economic policies to take effect and/or to measure that effect over full business cycles. According to the National Bureau of Economic Research (NBER), the recession ended in June of 2009. The unemployment rate was 9.5% at that time so it has improved since then. This improvement can be seen in the following graph:
The graph also shows that unemployment was already on a steady rise at the time of the Obama inauguration.
Looking the numbers up at TreasuryDirect, the national debt was about $10.6 trillion on January 20, 2009 and is now about $14.3 trillion. As with the unemployment rate, however, it makes sense to allow a time lag. The policies for fiscal year 2009, which ended on September 30, 2009, were proposed by President Bush and passed by the existing Congress. The prior link shows the national debt on October 1, 2009, the first year of Obama's first fiscal year, to have been $11.9 trillion, a full $1.3 trillion above the number given on Romney's blog. This seems like the earliest point at which Obama's performance should be measured. As with the unemployment numbers, it can even be argued that the first two years, 2009 and 2010, should to be skipped or ignored as they are heavily effect by prior economic policies.
Finally, the graphs at this link and this link suggest that the numbers for the price of gasoline are approximately correct. However, note for the second graph that the price was $4.26 per gallon on 7/7/2008, just a few months before Obama's inauguration and happened to have been near a recent low during the inauguration. In addition, the recent rise is corresponds with the recent conflicts in Libya and other oil-producing states. Hence, it seems difficult to draw any conclusions from the change in gas prices.
All of above shows how important it is to look at as much data as possible when analyzing economic issues and not just look at a few, isolated numbers. This is especially the case when those numbers come from a partisan source and may be cherry-picked or otherwise manipulated.
Note: There is a discussion of this post at this link.
- R Davis
- I became interested in U.S. budget and economic matters back in 1992, the first time that I remember the debt becoming a major issue in a presidential election. Along with this blog, I have a website on the subject at http://www.econdataus.com/budget.html. I have blogged further about my motivations for creating this blog and website at this link. Recently, I've been working on replicating studies such as the analysis at this link.
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