In today’s commentary at Bloomberg, Caroline Baum details the surge in job creation recently appearing in the econometric models used by the government and its central bank, lamenting the disconnect between said models and job creation in the real world.
Just when you thought you’d heard the last of “jobs created or saved,” the Obama administration’s quarterly report card on its $814 billion fiscal stimulus, along comes the Federal Reserve with its own model-derived guesstimates.
The Fed’s full menu of securities purchases, starting with $1.7 trillion of Treasuries, agency and mortgage-backed bonds in late 2008 and 2009 and including the current $600 billion of intermediate- and long-term Treasuries, “will have raised private payroll employment by about 3 million jobs,” said Fed Vice Chairman Janet Yellen.
You’d think unemployed and underemployed workers would be ecstatic. Instead, 46.8 percent of consumers surveyed by the Conference Board said jobs were “hard to get” in December, down slightly from the peak reading of 49.4 percent in 2009.
With fiscal policy saving or creating 3.5 million jobs and monetary policy manufacturing another 3 million, why, the U.S. could be at full employment in no time!
The economy lost 8.5 million private-sector jobs from December 2007 to December 2009, recouping 1.3 million since then, according to the Bureau of Labor Statistics.
One could argue that, without the fiscal stimulus and money printing, we’d have lost far more than the 8.5 million jobs in recent years, however, one could also argue that job gains produced only by models are just silly and that, as Caroline notes, the White House and the Fed should “leave fantasy forecasts to the elves”.
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