Tuesday, February 23, 2010

Misleading Headline of the Day

The CBO did not say that the stimulus package created 2.1 million jobs as per the headline here. That headline, apparently proffered by the AP does not actually reflect the body of the article, which claims that the CBO scored the stimulus package as having created between 1 million and 2.1 million jobs.

What the CBO is attempting to claim is that the unemployment situation would have been far worse - to the tune of 1 to 2.1 million additional jobs lost but for the stimulus package. That's a pretty difficult thing to prove, given that the unemployment rate continued rising all through the period that the stimulus package was in effect, and that the rate has moderated only with the Bureau of Labor Statistics adjusting the size of the workforce to shrink it to make the job loss figures appear that much better than they really are.

How did the CBO arrive at that conclusion? Well, they based the job growth on their estimate that the stimulus package added anywhere from 1.5 to 3.5 points to the economy in the past year, and that translates into 1 to 2.1 million jobs. I'd say that it is wishful thinking to suggest that anywhere near that many jobs were created during that time - particularly in the private sector that engaged in slash and burn job cuts to stay afloat.

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