Still probably right but for the wrong reasons

by Russ Roberts on June 7, 2009

in Stimulus

Innocent Bystanders has updated the graph (HT: Zev Fredman) using the May numbers:
Stimulus-vs-unemployment-may2

It's wrong (as I've pointed out before) because they've plotted the April '09 number above the point on the horizontal axis that represents the second quarter of 2009. The second quarter of 2009 will be the average of April, May, and June. June isn't out yet. The May '09 number is plotted at almost the third quarter of 2009–a number we won't know until October.

Now I'm pretty confident that the second quarter number will be even worse than the April '09 number. So the gap between "With Recovery Plan" and "Without Recovery Plan" will be even larger. But until July (when we'll have the June numbers and thereby can calculate the second quarter of 2009, this is not a legitimate picture of the recovery's failure.

Meanwhile, as of May 29, a grand total of $44 billion of the $787 billion stimulus has been spent.

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{ 10 comments }

vikingvista June 7, 2009 at 3:24 pm

Fortunately, much like the effect of penicillin on Streptococci, the diversion between Obama's pronouncements and reality is a wider chasm than even large errors can hide.

Did I just mix 3 metaphors?

Sonic Charmer June 7, 2009 at 3:40 pm

If your critique is correct (I'm not sure cuz I can't tell where the x-axis Q1/Q3 ticks are supposed to be), the dots should all be moved further left, and the divergence is actually even wider than shown.

Bill Stepp June 7, 2009 at 5:16 pm

Here's the quote of the week, from The Economist (June 6), p. 6:

Venezuela's president, Hugo Chavez, praised "Comrade Obama" for nationalising General Motors and expressed worries that he and Cuba's Fidel Castro could end up to the right of the president of the United States."

Hail Comrade Obama, a true Hero of the United Socialist States of Amerika.
If he hits his gosplanning targets (as opposed to hitting a taxpayer on the head), he'll deserve a Lenin Prize.
Sieg heil, O-man!

Billy June 7, 2009 at 7:30 pm

Honestly, I thought you were going to link to this.

TrUmPiT June 8, 2009 at 1:28 am

I don't think the rest of stimulus package should be spent as planned. The money will be needed to pay for the coming nuclear wars with North Korea and Iran. Mark my words. As long as we are not nuked ourselves, and put out of commission, most every able body person will be employed for the war effort. The same cannot be said for Seoul, South Korea, that will be made a sea of fire by the North Korean military. North Korea will be obliterated of course. Japan may suffer severe damage and loss of life as well. Israel will probably use the 2nd Korean war as a cover for a massive attack on Iran. I predict all this will happen and trigger a 2nd Great Depression as bad or worse than the 1st one. Evil, or if you prefer, evil people in power simply cannot be stopped, as history has demonstrated time and time again.

Αμάτι Nώνυμος June 8, 2009 at 7:27 am

Graph is to show what happens with unemployment when Previously Working Poor High Marginal Propensity Relief is siphoned into a cover-up slush-fund for wealthy banker. We are now waiting for his wife to spend our taxes.

Divertimento in F

Mr. Winston June 8, 2009 at 11:55 am

Can anyone verify where this graph came from originally? I followed the link but it never sourced the graph. At issue is whether this was a claim actually made by the administration or whether it was deceptively extrapolated.

Watchman June 8, 2009 at 3:37 pm

For Mr. Winston:

The original chart is found on page four of this document http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf

geoff June 8, 2009 at 4:58 pm

It's wrong (as I've pointed out before) because they've plotted the April '09 number above the point on the horizontal axis that represents the second quarter of 2009.

No, that's incorrect, as I pointed out in your previous post. The marks on the Obama adminstration's graph correspond to the beginning of the quarters, so the numbers for the end of Dec '08 are above the Q1 mark and those for the end of June will end up over the Q3 mark.

I followed the link but it never sourced the graph. At issue is whether this was a claim actually made by the administration or whether it was deceptively extrapolated.

The graph was copied directly from the Obama team's document – all I did was add the current data points. The source was described in a couple of the posts prior to the one linked here: those posts are linked by the current post at the bottom.

geoff June 8, 2009 at 5:24 pm

I stand corrected: the link to the document by Obama's team is in fact in the current post.

And as to the original data plotted: I looked at it again, did some plots on the side, and decided that you're right – they are plotting quarterly averages at the end of each quarter, rather than the regretfully Byzantine way I interpreted their data. I'll correct it.

This will make their predictions look even worse.

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