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The economy and the 2010 election (with graphs!)

As we edge closer and closer to the midterms and people like me keep saying that the main thing that matters is the economy; both its absolute performance over the past 14 months and its apparent trends. But why say it when you can graph it? With the help of Dylan Matthews, I pulled together a few different ways of looking at the Obama administration's economic record. We'll start with the one that matters most to people: Job growth (source: Steve Benen).

Unemployment Chart310.JPG

Next, housing prices. Note that this graph, which uses Case-Shiller data, runs back to 1988. You're looking for the performance at the right edge, beginning in January of 2010 (Source: Calculated Risk).

CSJan2010YoY.jpg

The Dow Jones Industrial Average:

dow_jones_industrial_average_during_the_obama_administration.png

The Libor, which is the interest rate at which banks lend to one another and is generally considered a measure of financial risk. Its 2008 spike was among the most unexpected and terrifying indicators of the crisis.

one-year_libor_interest_rates_during_the_obama_administration.png

And, finally, GDP. A quick note on this graph: The data is quarterly, so the dot in April of 2009 is covering January, February, and March of that year, which is to say, the start of the Obama presidency.

quarterly_gdp_growth_during_the_obama_administration.png

The trends in all these cases are good. Very good. That isn't to say the actual condition on the economy is good. A month of robust job growth doesn't nearly compensate for a year of accelerated job loss. And so long as we're talking about the elections, I should add one more graph. This sucker comes from CBO and tracks revenues and outlays. When the dark blue line jumps above the light blue line, we're running a deficit.

CBOdeficitproj.jpg

This graph is a political problem for the Obama administration (if not, in the short-term, an economic problem). But it is also necessary for all the other graphs. The bank rescue, which added temporarily to the deficit, stabilized the stock market and set the stage for its recovery. The stimulus, which also added to the deficit, helped moderate the job losses and and has contributed to recent gains. You could've made the lines on this graph better, but only by letting the lines on the other graphs get worse.

But though the country may like Keynesian economics in practice, they don't like it in theory. Government deficits, particularly with the backdrop of the bailout and the sense that normal Americans are still tightening their belts, are unpopular. The Obama administration's hope is that the other graphs on this page keep heading in the right direction, and with the economy feeling better, the deficit recedes as an issue. Politically, the GOP needs the recovery to be too slow and halting to really touch people, thus preserving popular anger over poor economic conditions and high deficits and returning them to power in 2010.

Update: Folks wanted a graph on unemployment rates, too, so I've added one:

unemployment_rate10.jpg

You'll see I've got two rates on there: The first is the normal unemployment rate. The second is "U6," which is a broader measure of employment distress. It includes "marginally attached workers and those working part-time for economic reasons."

That said, if I were creating a set of political-economic dashboard measures, I wouldn't add the unemployment rate for a couple of months yet. Employment is a generally lagging indicator. It comes back after GDP growth and job growth have already been going for awhile. So though the amount of employment distress in the country will be very important come the 2010 election, what you want to be watching are the factors that will decide the unemployment rate (and its trend) come November, not what the unemployment rate is right now.

By Ezra Klein  |  April 8, 2010; 7:23 AM ET
Categories:  2010 Midterms , Charts and Graphs , Economy  
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Next: Greenspan: It wasn't me.

Comments

Interesting, though the economic indicators used here are not the ones most commonly used in political science models of economic voting. Can you provide a similar update on GDP, real disposable income, etc?

Posted by: kwcollin | April 8, 2010 8:54 AM | Report abuse

all these wonderful graphs and not one that tracks what really matter, the unemployment RATE.

Regular Americans don't track the number of jobs gained or lost per month (no matter how much you want them to). They track the rate. The rate is still 9.7 and not expected to go down soon.

At least you were willing to show the deficit figure (revenues vs outlays) that is at its highest split right now at any time in the graph.

You're right this is the biggest problem this administration and more importantly Dems in congress have. How to sell the need to run these astronomical deficits while still not helping the unemployment rate much.

Keep selling Ezra!

Posted by: visionbrkr | April 8, 2010 8:54 AM | Report abuse

Actually, visionbrkr, while unemployment may matter a great deal for the lives of Americans, it does not have any notable impact on midterm voting (the reason for the post). See political scientist Seth Masket for the hard data on this: http://enikrising.blogspot.com/2009/11/does-unemployment-affect-midterm.html.

Other factors, like growth in GDP and growth in real disposable income, are far more predictive.

Posted by: kwcollin | April 8, 2010 8:57 AM | Report abuse

Is there a version of the first graph with stacked bars? In my mind, when I take all of the negative bars and put them atop one another and then place the stack next to a similar stack of positive bars, I see a rather gloomy picture... a really, really tall stack of negative bars standing beside a puny stack of positive bars.

A while back, Dr. Krugman offered an estimate of the number of jobs that would have to be gained each month in order to simply make up for the losses and accommodate the population expansion. It would be great to be able to overlay his number atop the other graphs.

Posted by: rmgregory | April 8, 2010 9:31 AM | Report abuse

160,000 is not robust growth.

Posted by: pj_camp | April 8, 2010 9:41 AM | Report abuse

kwcollin,

That's an interesting link, but the take away I had was that unemployment rate does matter, but the effect can be obscured by other important issues.

Just for a couple of years:

1966 - Vietnam War
1994 - Clinton HCR failure / Contract w/America
2002 - 9/11 Attacks / Bush Popularity
2006 - Iraq War / Republican scandals

I think the effect of the economy can be seen as we go from 1982 to 1986 and 1994 to 1998. I think 2010 is more like those years - granted HCR passed, but I think on the whole that nets out as a polarizing issue (Republican and Democratic base both energized).

There is also the issue of the current composition of Congress (if I recall correctly, Reagan faced a Democratic congress pretty much throughout his term, so there were fewer seats for Republicans to lose in '82 than Democrats in '10).

Outside of the data, trends on charts don't matter - it's how the economy is perceived on main street. If your neighbor lost his job six months ago and the only difference now is that more neighbors aren't losing jobs (but the unemployed remain unemployed), the economy is still going to be perceived as weak, and the stimulus as ineffective. The charts and graphs won't matter to most voters.

On another note, I wonder what those charts would look like for 2003-2004, when Kerry ran against Bush in part on the economy.

Outside of all that, I actually don't think the Democrats will get completely destroyed (due to the base being energized by HCR), but I don't think the economy is going to be a plus or even a neutral. My expectation is that Democrats '10 are going to fare somewhat worse than Republicans did in '82.

Posted by: justin84 | April 8, 2010 10:35 AM | Report abuse

I've read most of the comments, and I'm surprised that not one mentioned the rate of "True Unemployment". If cited at all, they use the government's 9.7% unemployment rate.

True unemployment represents the percentage of Americans residing in the USA who are "the unemployed people willing; able; and seeking employment" in this country.

The "true" rate of unemployment in the USA is currently at 21.9% and growing.

Posted by: bwshook1 | April 8, 2010 11:10 AM | Report abuse

"...the country may like Keynesian economics in practice, they don't like it in theory."

The problem here really is not of Economic Theory. Public does not need to discuss that Economics as a good Social Theory has serious challenges and the last recession has essentially eliminated credibility of Economics.

The real question is Politics of Deficits. The simple answer for Obama and Dems is, what do GOP have to offer to reduce the Deficit? By adopting a philosophy where spending for National Security is totally out of bounds for any scrutiny, GOP racked deficits which in turn has come to a point of national security threat itself. Next, all unfunded Tax Cuts and Entitlement expansion by GOP.

GOP cannot blame Obama for Bailouts, that deficit was done by Bush again. Next, GOP will blame Obama for Recovery Act and Health Care Reform Bill. Obama needs to defend there as things are turning positive.

GOP and Tea Party are NOT offering any solutions for deficit reduction. Blaming others and restating the problem (when you have totally discredited history) does not make GOP to claim that they should be elected. So one needs to keep going to GOP to ask - where is their Deficit Reduction Plan?

Posted by: umesh409 | April 8, 2010 12:08 PM | Report abuse

So clearly, the goal of the GOP is (1) to slow the economy down while (2) making it look like the Democrats are responsible. So filibuster every stimulus program and make the dumb but popular argument about the government tightening its belt.

Posted by: randrewm | April 8, 2010 12:50 PM | Report abuse

Ezra, you make it sound like the GOP would want america to fail! We know that's downright silly!

Posted by: theamazingjex | April 8, 2010 12:58 PM | Report abuse

About a week after the Democrats passed health care reform the same CBO that said Obamacare will lower the deficit reported that our ecer increasing deficits could reach 90% of our GDP by 2020.

Things are getting better but there is a long, long way to go. Spending needs to be restrained and the Democrats need to be voted out of power.

Posted by: wcollinsaz | April 8, 2010 3:37 PM | Report abuse

It may be true that, "A month of robust job growth doesn't nearly compensate for a year of accelerated job loss.", but of course there has not yet been a month of "robust" job growth. Rather, we have had a month of job growth at the expected seasonal rate, with half of the new jobs in the form of temporary jobs (and no, this is not the Census Jobs talking point - check out the actual BLS summary where it describe the growth in employment with temp employment agencies) ... when around 80,000 of the 160,000 new jobs are temporary jobs, that does not quality as "robust".

That's why the seasonally adjusted headline unemployment rate was unchanged and the broad unemployment rate ticked up by 0.1%.

Check back in when (1) the growth in full time employment is greater than the expected seasonal change and (2) the seasonally adjusted broad unemployment rate is declining, rather than rising. Then you can start talking about "robust job growth".

Posted by: BruceMcF | April 8, 2010 3:42 PM | Report abuse

To appreciate the true trends, you'll need to show at least a decade before Obama came into office to show it's his policies, rather than the Bush years, that are creating the upward trends.
Some of your graphs are a bit too simplistic.

Posted by: JerryMm | April 8, 2010 4:59 PM | Report abuse

Correct me if I am wrong, but are those graphs based on "facts"?

The Republican Party, backed by Rupert Murdock's tabloid news empire have almost completely taken politics and policy discussion out of the realm of facts.

Check the record of the last year. I, personally, can't find one Republican defending a remark or position by trying to prove it is factual. Why waste time getting involved in the whole risky "factual" thing you can use repeating and repeating what you just said?

Republicans know emotional catch phrases like "kill granny" and vague rallying cries like "protect the Constitution" and "take out government back" get more mileage from the Fox News watching public than messy and inconvenient facts.

Posted by: JustAJoe | April 8, 2010 8:42 PM | Report abuse

So, things have been getting worse at a slower rate since Obama started. Quite an accomplishment,maybe we should make him King.

Posted by: mpmarrone | April 8, 2010 9:25 PM | Report abuse

Regarding the job growth chart, many that I've tested don't understand its meaning and feel that it is deceptive. While it's true that the change in job loss/growth is good, we're still in a deep job hole. That last bump at the end is temporary Census workers.

Here's a more clearly labeled graphic.
http://3.bp.blogspot.com/_IcTTTYdTZQM/S4rejx33k1I/AAAAAAAAANs/huXXYYl54bQ/s1600-h/cumulative_job_changes.png

Blog: What Does the Obama Job Chart Really Mean?
http://soquelbythecreek.blogspot.com/2010/02/what-does-obama-job-chart-really-mean.html

The one chart that I wouldn't want to see during the campaign is courtesy of the Congressional Budget Office. $800 BILLION+ deficts aren't pretty, no matter how you plot them.
http://www.cbo.gov/ftpdocs/112xx/doc11231/index.cfm

Posted by: SoquelbytheCreek | April 15, 2010 7:15 PM | Report abuse

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