Stimulus Spending And Job Growth: Update 8
Well, here we are again. Sorry this update is a bit late. I will try to be more timely next month. Let's look at the jobless numbers for January, and update my predictions.
In June I wrote an article called "Stimulus Spending And Job Growth". In the article, I pointed out that Barack Obama said his stimulus package would create approximately 4 million "new jobs" over two years. He also said the unemployment rate would not exceed 8%. In order to create 4 million jobs in 24 months, the Obama administration would have had to create approximately 166,667 jobs per month to reach this target, assuming linear job growth. That scenario is shown as violet in the following graph.
As of June, when I wrote the article, the trend in job growth was actually negative. So I developed a curve showing what I thought might be a more "Likely" scenario -- plotted as light blue in the following graph. As you can see from the graph, the actual trend of job losses is somewhat worse than I had predicted -- plotted as yellow and red. The unemployment rate has dropped to 9.7%, but only because more people dropped out of the job market in January. The jobless rate continues to generally follow the trajectory I had envisioned in June...
I have revised the November and December job figures according to the latest data from the US Dept of Labor. In November 64,000 jobs were created versus the 4,000 previously reported. In December 85,000 jobs were lost. And in January, another 20,000 jobs were lost.
President Obama has already blown his promise to keep unemployment under 8%. And his ability to create 4 million new jobs in 24 months is fast fleeting. Instead of having to create 166,667 new jobs per month, which he originally needed to reach his target, he now needs to create 517,461 jobs per month -- in order to make up for the nearly 2.8 million jobs that have been lost since the stimulus bill was signed.
Good luck Mr. President. We're all rooting for you... NOT!