Two polls. Two graphs. Two views. Be afraid. Be very afraid.

By mw | Related entries in Economic recovery, Economy, Legislation, Stimulus

Justin posted a Gallup poll showing that “Americans Approve of Obama’s Stimulus Work” further explaining that “…there is strong disapproval for the way Republicans are handling this situation.”

I certainly agree with the latter part, as I also strongly disapprove of how the Republicans are handling the situation. They seem all too willing to tinker at the fringes of this porker, rather than take a meat axe to it, or even better, work to kill it and start over. I particularly disapprove of the two or three Republican Senators that are willing to sacrifice principle for political expediency and enable this very bad bill to pass.

Rasmussen also released a poll that, in a similar spirit, we can entitle Americans Dubious about Obama’s Catastrophe Claims:

A new Rasmussen Reports national telephone survey finds that 44% of Americans agree with Obama and 41% do not.

There is a huge partisan divide on the question. Sixty-nine percent (69%) of Democrats agree with the president’s insistence that failure to pass a bill now means catastrophe, while 64% of Republicans do not. Among voters not affiliated with either major party, 32% say Obama’s right, but 51% don’t agree (see crosstabs).

A plurality of women agree with the president while a plurality of men disagree. Those who earn less than $40,000 a year lean in Obama’s direction while those who earn $60,000 to $100,000 lean the other way. By a 47% to 40% margin, investors reject the notion that inaction will lead to catastrophe.

While the partisan divide on the question is predictable, it is particularly interesting that a large plurality of unaffiliated voters disagree with Obama that failing to pass the bill will have catastrophic consequences.

These numbers are likely to change. The president is on the campaign trail, and will be speaking to the nation tonight. We know how effective he is at both campaigning and speaking. If he wants to continue to use the fear card to sell this bill, it’ll work. He is playing to his strengths.

The economy is very bad. No doubt about it. But how does it really compare to past recessions? Justin posted a graph yesterday that was truly frightening. The graph was widely distributed across the blogosphere. You couldn’t design a graphic that would better serve to instill fear about the state of the economy. In fact, it was apparently designed to do just that, by truncating the left scale to emphasize the difference in the three compared recessions, using absolute unemployment numbers rather percentage of the workforce, and pretending that history began in 1990.

The following graph offers a somewhat broader perspective, comparing all recessions in the modern era (since 1946), expressed as an unemployment percentage.



H/T to Marginal Revolution for the graph.

The green bar is the current recession. There is no doubt, this is a bad one. About in the middle of pack as far as recessions go. The graphic points out an interesting aspect of recessions. They all end. And, surprisingly, they didn’t all need a trillion dollar stimulus bill from the Feds to end them. In fact, all of them combined up to now did not need a trillion dollar stimulus to end.

It is incumbent on our Federal government to help cushion the blow for those Americans devastated by this economic contraction. That includes unemployment extensions such as are in the current stimulus bill. If there are infrastructure projects that we know we really need, like upgrading the electric transmission backbone, and repairing dangerous bridges, why not do the projects now to cushion the recession impact? I’m on board. The operative word being “need”. But to spend a trillion dollars, just for the sake of spending a trillion dollars, because some economists and politicians have an unproven dogmatic ideological belief in Keynesian theory – or – more likely – using unproven Keynesian theory as an excuse to load up a porker the likes of which we have never seen before – strikes me as insane.

But perhaps I am wrong. Perhaps tonight the President will sell me on the fear that the pending catastrophe is so great we really need to be stampeded into the largest spending bill in the history of the United States. That we really should not care that there is massive spending in this bill for projects that we do not need and will not actually stimulate the economy (translation of the bill is not perfect). That the impending crisis is so great, that we cannot afford to take the time to make sure our money is not wasted.

Perhaps he can convince me.

But he is going to have to scare the hell out of me.

UPDATED 14-March-10:
I linked this post from a future post, and noted the graphic had disappeared. Edited only to replace the graphic.


This entry was posted on Monday, February 9th, 2009 and is filed under Economic recovery, Economy, Legislation, Stimulus. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

21 Responses to “Two polls. Two graphs. Two views. Be afraid. Be very afraid.”

  1. bunny fufu Says:

    I don’t think anyone thinks that we’re going to slip into another Dark Ages were the stimulus not happen. But isn’t part of the point to soften the blow and help the economy out so that this recession doesn’t take a long-arse time to climb out of? Looking at that graph, only two recessions lasted shorter than ~18 months. The question is whether spending the trillion now will make this recession look more like the powder-blue line of the 1980 recession and get the economy on the right track.

  2. Tully Says:

    Thanks for posting that. If I”d have had the time yesterday, I would have done just what you did after noting that Justin’s graph came from (of course!) Nancy Pelosi. Not only was the construction of it extremely misleading, it actually fudged some of the data as well.

    Employment is a lagging indicator. In the meantime, the leading economic indicators have begun to either flatten or turn up. The data indicate we’ve probably already reached a bottom, and the massive stimuluses of cheap energy and the Fed’s massive expansion of the money supply are having an effect.

    This is IMHO a major reason for the urgency claimed the current porkulus bill. It would make little difference in terms of actual “stimulus” effect if it were passed next week, next month, or next quarter. But if it isn’t passed right away, it can be examined closely and the the pork stripped out, and it’ll also become obvious that while bad, things are not nearly as catastrophic as proponents are making out.

    BTW, NBER uses a fairly subjective definition of “recession, one that includes periods that most economists would call slowdowns and not call recessions. In strict definition, recessions involve consecutive quarters of negative GDP growth, not merely a decline in growth rates that does not turn into shrinkage. Something to keep in mind.

    The candidate who ran on hope is now trying to scare the hell out of us rather than lead and convince. I am unsurprised.

  3. Jim S Says:

    As far as the graph is concerned…

    7 of the recessions on it were already either recovering jobs. Another had quit losing jobs though it wasn’t gaining, either. Still another wasn’t losing jobs at nearly the rate this one is. This one also still shows no sign of bottoming out. They all are referring to the BS number known as U3, not the U6 number that is more reflective of what’s really happening to people. As one of the comments in the article with the graph points out, the root cause of this recession is unlike any of the other post WWII recessions, which affects pretty much everything about it. There’s the real broader perspective.

  4. John Burke Says:

    Interesting that the slope of the line for this recession seems to be tracking closely to that of the 1981 downturn, which is the realistic and relevant comparison, not the Great Depression.

    Jim S — Of course, in some recessions, at the 12 month mark, unemployment had begun to subside, because many recessions have been shorter, with growth resuming sonner. It would be more enlightening to have a graph superimposing GDP and unemployment to see where we stand compared to other recessions. Tip: it would still look a lot like the 1981 cycle.

    As for the differende between unemployment measure, the other long-term unemployment and and “underemployment” measure are available for most of these recessions. If we saw them all on the same graph, the comparisons would work out pretty close to these. The U3 number works well as a surrogate for all the other measures.

  5. Jim S Says:

    “In the meantime, the leading economic indicators have begun to either flatten or turn up. The data indicate we’ve probably already reached a bottom, and the massive stimuluses of cheap energy and the Fed’s massive expansion of the money supply are having an effect.” Huh? From the Conference Board…6 out of 10 indicators are still negative. And as I pointed out before given the atypical nature of this recession, assumptions based on previous recessions are likely to bite the one making them in the ass.

    LEADING INDICATORS. Four of the ten indicators that make up the leading economic index increased in December. The positive contributors — beginning with the largest positive contributor — were real money supply*, interest rate spread, manufacturers’ new orders for consumer goods and materials* and manufacturers’ new orders for nondefense capital goods*. The negative contributors — beginning with the largest negative contributor — were building permits, average weekly manufacturing hours, index of supplier deliveries (vendor performance), average weekly initial claims for unemployment insurance (inverted), and stock prices. The index of consumer expectations held steady in December.

  6. Tully Says:

    Jim, the LEI index rose in December. You read it by the overall weighted index number. Since you know where to find it, I suggest reading the CEI as well. Then take a spin through some of the international indexes related to commodities and manufaturing. They’re all signalling that the downturn has pretty much bottomed out. Now we have the fallout from that moving through the system.

    Now, that doesn’t mean we won’t lose more jobs before employment turns around. We sure will, and that’s exactly the area Congress should be working on–directly supporting and assisting those knocked out of work. Not finding excuses to stiff you and me with the tab for frisbee-golf courses in Austin. Helping those hurt by the downturn will be plenty expensive enough without the pork spree and BS tax breaks in the current monstrosity.

    Whenever pols (of either party!) start trying to scare you into rushing things, especially extremely expensive things, you should dig in your heels.

  7. Jim S Says:

    Tully,

    We both know that if the Democrats tried to just do something for the unemployed the Republicans wouldn’t join in and not even the “moderates” would cross over to support it. It would be derided as welfare and socialism and every other name the right wing could come up with. They would never extend and increase the benefits needed to the extent that this recession would need. If things are near bottoming out…the questions are:

    How long it can stay on the bottom before moving back up?

    How long will it take for jobs (That lagging indicator.) to begin to move back up?

    Will they move back up at a rate to make up for the losses in any reasonable time frame? I’ve seen speculation that this will be a jobless recovery.

    Will real income stay flat? I’m not aware of anything that indicates that we’re about to recover from that problem.

  8. J. Harden Says:

    Interesting article by Bloomberg on a dangerous part of the spend bill, at least if your a senior. Sure, you can see the doctor of your chosing, but he’ll be in deep shit if he doesn’t do what we say. This thing just keeps getting better —

    http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_mccaughey&sid=aLzfDxfbwhzs

  9. Jimmy the Dhimmi Says:

    I don’t think anyone thinks that we’re going to slip into another Dark Ages were the stimulus not happen

    Our deficit spending will be so unprecidentally high for this stimulus bill, plus our Congressional budget, plus TARP, plus our Federal reserve plan to give money to the banks, that we are going to rely on a massive sale of T-bonds to cover it. We could actually run out of foreign buyers so that the Fed will be forced to buy the rest with printed money.

    If speculators in the bond market see this and sense an inflationary trend brewing while government projects don’t turn out to be exceptionally productive, we may see a massive sell off in the bond market while the dollar is still relatively high in value (as it is now), and a subsequent collapse of the dollar value which, would truly result in the Dark Ages!

  10. Mario Piperni Says:

    Tell you what, mw…if you were a part of the 1 in 6 homeowners who owe more money than the value of their homes…or perhaps if you were one of the 600,000 who lost their jobs in January…then maybe, just maybe, you might be scared.

    Trying to make a case that the current economic crisis is “bad” but that it’s not as bad as previous recessions is ridiculous. The tens of millions who have been severely affected by this recession don’t give a hoot how it compares to any other recession. Their fears and hopes are real and while Republicans play politics with their eye on 2010, the economy worsens.

    Try putting that on a graph.

  11. david Says:

    If speculators in the bond market see this and sense an inflationary trend brewing while government projects don’t turn out to be exceptionally productive, we may see a massive sell off in the bond market while the dollar is still relatively high in value (as it is now), and a subsequent collapse of the dollar value which, would truly result in the Dark Ages!

    Gee Jimmy, too bad you didn’t care about any of this while the lying scum you keep voting for were doubling the debt.

  12. Trescml Says:

    The graph is an good example of how things could be worse. One item to note though is that during the recessions that were worse on the graph the Fed rate was increasing just prior to the recession. Now the interest rate really can’t get any lower. I think the better comparison is probably the Japanese real estate bubble of the 90s (which is a really scary thought considering how that worked out).

  13. mike mcEachran Says:

    1. @ “While the partisan divide on the question is predictable, it is particularly interesting that a large plurality of unaffiliated voters disagree with Obama that failing to pass the bill will have catastrophic consequences.”

    And… what do the “people who disagree with Obama” know, that Obama’s economists don’t know? They “don’t believe him.” Really? Based on what? Gut? I’m supposed to be swayed by the opinion of a “plurality of unaffiliated voters” over Obama’s team of experts. Aren’t these the same people who voted in Bush twice. I’ll take my chances with the experts this time. Thanks.

    2. @”The graphic points out an interesting aspect of recessions. They all end.”

    Excuse me, but that’s not really the question, is it? The question is not will the recession ever end, the question is: will “doing nothing” or even “delaying to make sure we’re not being wasteful” cost more than $850B? Obama’s economists say, yes, it definitly will. And doing nothing, or delaying could cost us untold amount of lost time and competitive status, not to mention the agony of untold millions while they wait for your delayed but inevitable recovery.

    I’m sorry, but I just don’t buy it, mw. Your post has the distintly familiar taste of bs.

  14. Chris Says:

    Is that was the slightly chalky, nutty taste was while I was reading that post?

  15. Jim S Says:

    BTW, since we are discussing graphs and data here are a couple of posts from good econ sites that do not take nearly as sanguine a view as MW and Tully would like us to take.

    Calculated Risk

    Brad Setser at the Council on Foreign Relations

  16. Jim S Says:

    Awaiting moderation? What is it with the Captcha lately?

  17. mw Says:

    @Jim
    Released your fear mongering comment from moderation prison. I don’t understand why the spam filter does it what it does. I don’t think that the two links triggers it, but maybe. It might simply be the capitalized phrase “Calculated Risk” makes it think the comment is investment spam.

    Anyway, don’t have time to respond to the many fine (and the few insane) comments on this thread tonight. Busy day tomorrow, but will be back in a day or so to weigh in.

  18. Jim S Says:

    Yes, everything written that shows that mw is wrong about how everything’s just a minor bump in the road is “fear mongering” as opposed to simply being reality instead of his fantasy world.

  19. mike mcEachran Says:

    This issue is about credibility. If the country is facing a dire circumstance, it is the administration’s obligation to get our attention, and compel us to action – anything less is irrisponsible – call it fear mongering if you will, but if I’m about to be hit by a train I want someone shouting at me. That’s what GW did in the face of Sadam Hussein’s impending “mushroom cloud”; at the time, he had some credibility (call us naive), so we gave him permission to act. He wasted that credibility, of course. Please tell me what evidence is there that this president is speaking anything but honestly. Please. Does Obama have an ulterior motive that I can’t see? Did the economy but a hit on his daddy?

  20. Donklephant » Blog Archive » Obama embraces the Bush/Cheney unitary executive Says:

    [...] W Bush and the Republicans was particularly frightening. Those fears were confirmed last week, when Obama steamrolled a very bad stimulus bill over a neutered Republican party, handing future generations more debt and [...]

  21. Donklephant » Blog Archive » Obama embraces the Bush/Cheney unitary executive Says:

    [...] W Bush and the Republicans was particularly frightening. Those fears were confirmed last week, when Obama steamrolled a very bad stimulus bill over a neutered Republican party, handing future generations more debt and [...]

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