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Good economy, bad economy: Both candidates are right

U.S. Republican presidential candidate Mitt Romney speaks at a town hall meeting at Central High School in Grand Junction, Colo., on July 10, 2012. President Obama and Mitt Romney have different takes on the economy. Commentator Justin Wolfers says they're both right.

With the presidential election race underway, we've been hearing conflicting stories about the economy. When Mitt Romney speaks, you hear the U.S. economy is in terrible shape. By contrast, when the president speaks, you hear a message that's positively reassuring. Both are citing real data and usually, hard facts. So what explains the competing narratives?

It's not just that they're cherry-picking their favorite statistics -- though there is a bit of that -- it's actually that they're talking about different things. But you have to listen closely to hear it. The difference is that Romney is talking about how bad things are, while Obama is talking about how things are getting better. That is, Romney talks about levels, while Obama talks about changes.

For example, you hear Romney hammer away that the current unemployment rate is at a distressingly high level, 8.2 percent. He points out the number of jobs, which remains a depressing five million below its earlier levels. And bemoans how the economy is generating levels of income far below what it could.

Obama talks about the same statistics, but emphasizes instead how much they've changed for the better. He'll note that the unemployment rate has fallen by 2 percentage points since he assumed office. He'll mention that private sector employment has been growing for the past few years, creating 4.3 million jobs. He'll talk up the fact that income is growing today, while it was falling when he took over.

So in a direct sense, Obama's sunny optimism, and Romney's dark pessimism are both right.

As a voter, you'll have to decide which set of metrics you care more about. Should you punish the president because the economy is weak, or should you reward him with a second term, because it's been improving?

I don't know what you'll choose, but I do know that studies of voting patterns find that voters are more responsive to changing economic conditions than concerns about its level.

The implication is that, once again, Obama may do well running on a message of change.

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It seems to me that we should be talking about adjusting to permanent structural changes in the economy instead of arguing about relatively minor issues. The industrial sector is gone and will never come back and the mortgage and housing bubble was the last gasp for construction jobs. We need to figure out what we do and start doing it. On the bright side, a recent McKinsey Report is highlighting a the emergence of a highly consuming middle class in China, India and South America, and SpaceX and Planetary Resources are pioneering the commercialization of space. Those are the things we need to pressing our politicians to take positions on because they are the kinds of things we can build an economy on.

Vic Napier
www.JoblessEconomy.net

Totally misleading story. In fact it is the rate of change that highlights how bad this "economic recovery" is; not just the levels. This recession has seen the slowest rate of reduction in unemployment and slowest rate of improvement in job creation since the great depression. Moreover, the rate of economic growth is one of the slowest ever seen, this many years after the 2008 recession.

If Obama is a "sunny optimist" about this economy, he is even more out of touch than anyone could imagine.

First of all, Mr. Wolfer did not talk about rates of change. Secondly, Mr. Wolfer, being Australian, might be excused for not understanding how we set fiscal policy in America. Congress, not the President, has the exclusive ability to tax and spend. The proven method for making an economy grow is by increasing taxes on the most wealthy - people and corporations - and then by spending the additional revenue to provide goods and services which citizens need. The Congress elected in 2008 had a Democratic majority which passed a moderate stimulus, relative to the size of the problem. Obama, being a moderate, approved of this one-step-at-a-time approach. It helped moderately. The current Congress, elected in 2010, has a Republican majority whose main obsession is to stymy the economy the better to defeat Obama in 2012. Yes, your jolly tea partier is partying at your expense by deliberately retarding economic growth. The private sector has been creating jobs at a rapid rate. The public sector has been shedding them almost as fast. The net result is a stalled recovery. Consider the vast deficits created by Reagan and BushII - each of which acted as a massive economic stimulus maintaining economic growth by creating many, many public sector jobs. Our much touted system of government by checks and balances never anticipated the type of dysfunctional gridlock we have in Washington today. Australians, and most other democracies, enjoy a parliamentary form of government where gridlock results in a new election and a new governing majority forms a government intended to solve problems, not create them. The Republicans in the House of Representatives are all that is standing in the way of an end to the Bush-Cheney depression.

I'm writing to report a error in your guest commentary by Justin Wolfers http://www.marketplace.org/topics/elections/commentary/good-economy-bad-...

He said: "Obama talks about the same statistics, but emphasizes instead how much they've changed for the better. He'll note that the unemployment rate has fallen by 2 percentage points since he assumed office."

Unemployment was 7.6% when President Obama took office. http://www.bls.gov/opub/ted/2009/feb/wk2/art02.htm Unemployment topped at 10.1% and is currently at 8.2%. Unemployment has not gone down 2% but up .6%. The best you could say it has slightly raised since Obama became President.

I think a correction needs to be stated in the next show. This is more than a minor error but a clearly miss leading statement.

Obama was not even inaugurated until Jan 20, 2009 by which time, according to the article you site, unemployment had grown by 3.2 million workers out of work due to the Bush Cheney recession. Did you expect President Obama to wave a magic wand on day 1 of his Presidency and put Humpty Dumpty back together again? The rate of unemployment due to the disastrous policies of the Bush Cheney years continued to grow rapidly until the Democrats enacted some moderate stimulus measures which moderately improved the situation. Under Bush Cheney, it was public sector, government jobs, which grew at a rapid rate. Under Obama, it has been the private sector jobs which have kept the economy afloat. The reason public sector jobs are down is because after the Bush Cheney recession and the collapse of housing prices, real estate tax revenues are down, forcing layoffs of police, firemen, and teachers. Yes, understanding numbers can take a bit of thought but that little bit of thought is what makes all the difference.

This, of course, assumes the President can do very much about the economy. He can hire a butler at the White House. He can exhort Congress, but doing anything substantial requires legislation, and Republicans in Congress isn't about to do anything -- they ignored Obama's proposals a year ago. And where are the "job creators" we hear so much about?

Which candidate is it that is advocating for the restoration of Glass-Steagall, an expansion of the public sector and public industries to stimulate private sector hiring, a steeply progressive tax base, and the wholesale nationalization of ExxonMobil again? I forget. (Let's see, Bernie Sanders or Eliot Spitzer; it's going to be a tough one.)

"As a voter, you'll have to decide which set of metrics you care more about. Should you punish the president because the economy is weak, or should you reward him with a second term, because it's been improving?"

This, of course, assumes that the economy is the #1 issue on voters' minds.

The Constitution also grants Congress exclusively the power to raise taxes and appropriate funds. This power of the purse is one of Congress' primary checks on the power of the executive branch. Mitt and Obama can argue over who will be the better President, but without a better House of Representatives, our economy will continue to flounder. The Republicans in Congress make no secret that there plan is to defeat Obama by any means necessary, including holding the well being of all Americans, rich and poor alike, as hostages. The main difference is that rich people are much more able to weather this storm than are middle income Americans. And we all know the poor don't count because they do not vote.

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