It’s Tough Making Predictions…
May 18, 2009
This graph has been going around a good deal in the last week. (Source)
Basically, the light blue line is the unemployement rate the Obama administration predicted would happen if we didn’t pass the stimulus bill back in . The dark blue line is the unemployment rate the Obama administration predicted would happen if we did pass the stimulus bill. (Here’s the raw document.) And the red triangles are the actual unemployment rate as it has panned out. Not only are they worse than the Obama adminstration expected, they’re worse than what they expected even if we didn’t pass the stimulus bill.
I think it is fair to say that the stimulus bill has not been as stimulating as they told us it would be. Now, it could certainly be the case that the unemployment rate would be even higher than this if we hadn’t passed the stimulus bill, but that is about as non-falsifiable a statement as you can get.
(UPDATE: The author of this graph explains why he thinks there has been little effect … we’ve spent almost none of the stimulus money yet. I’m trying to figure out where he’s getting his data because I don’t see any infrastructure projects on there. I’m certain that there is infrastructure spending going on right now because there is a stimulus project not 3 miles from my house causing daily traffic jams.
UPDATE 2: Here’s the best I could find on stimulus money currently being spent.)
I don’t really feel like dogpiling on the adminstration on this particular issue, so I want to hit a broader topic here… the administration’s use of numbers. This graph tells us some simple things that are scary and a complex thing that is scarier.
The simple thing it tells us is that the Obama administration was completely unable to predict the economic conditions four months into the future. They thought we would be at about 8.0% unemployment if the stimulus bill passed and at 8.5% unemployment if we sat on our hands.
As it turns out, we passed the stimulus bill and we’re at 8.9%. The easy lesson is that they didn’t get that one right. But, as Robert Strom Petersen said, “It’s tough making predictions, especially about the future.” And I probably couldn’t have done any better.
But no one is hanging the weight of hundreds of billions of dollars around my neck, which makes it more OK that I can’t project the future economic conditions. It seems fair to demand a slightly higher level of predictive accuracy from an administration that is using their predictions to push trillion dollar policies.
The complex thing that this graph tells us is that the Obama administration is comfortable using graphs that don’t really have a basis in reality in order to bolster support for their decisions. Graphs make us think that something is scientific and studied and therefore more reliable. But reliability is something that has to be earned. The team that put this graph together should be questioned on what they got wrong and what they would do next time to get it right.
Basically, the next time the president uses projected figures to push his policies, I would like to see someone ask the following question:
“Mr President, the last number predictions you threw at us turned out to be pretty far off the mark. What assurances do we have that these new numbers are accurate?”