In January 2009, Chairwoman of President Obama’s Council of Economic Advisors, Christina Romer along with Jared Bernstein, then chief economist and economic advisor to Vice President Joe Biden published a report stating that unemployment would peak at 8% with help of the stimulus package and not go any higher.
The report titled: The Job Impact of the American Recovery and Reinvestment Plan, predicted the unemployment rate, with the help of the $821B stimulus plan would drop to around 7% by the end of 2010
Now in a recent interview with CNSNews.com, Bernstein said that his report was flawed and he now expects unemployment to stay above 8% and mostly only drop to about 8.5% by the end of 2012.
Asked about the flawed report, Bernstein admitted:
“Look, we made that projection back in 2008 at a time when the most recent information about the economy was that it was contracting at a rate of less than 1 percent. At the time, we simply didn’t have good information. We now know with revised data that in the very quarter where we made that wrong projection, the economy was contracting at almost 9 percent.”
“So the statistics were way off at the time. It’s also the case that that forecast that we gave back then was the consensus forecast of the economics community. I mean, it wasn’t just that we were wrong. Everyone was wrong. And I think it’s largely because we just didn’t have a clear picture yet of how bad this recession actually was going to be.”
How in the world can an expert economist make such a huge mistake of over 8% concerning the contracting of the economy? Perhaps it wasn’t as much of a mistake as it was purposed to sell the stimulus package to an unsuspecting nation.
Few of us believed his report in 2009 when he painted a rosy picture of the job market’s recovery with the huge stimulus package. However, his current prediction seems much more realistic, especially since the President’s plans will only result in the loss of more jobs instead of increasing them.