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RNC Communications - September 9, 2011

Today, the Obama White House is touting the analysis of economist Mark Zandi of Moody’s Analytics, which predicts that Obama’s new $447 billion stimulus bill will add 1.9 million jobs and lower unemployment by one percent. While that would certainly be welcome news, it is worth recalling that in July 2010, Mark Zandi and Alan Blinder penned an analysis of the stimulus titled “How The Great Recession Was Brought To An End.” If the Great Recession was actually bought to an end, we obviously would not be discussing another massive stimulus package. As you can see below, the predictions they made then were in some cases twice as optimistic as what has actually occurred.

Moody’s Economist Mark Zandi Predicts Obama’s $447 Billion Stimulus Package Will Add 1.9 Million Jobs And Lower Unemployment By One Percent. “A top economist says President Barack Obama’s job plan will likely add 1.9 million jobs and grow the economy by 2 percent. Mark Zandi, chief economist at Moody’s Analytics, also said Obama’s $447-billion plan would likely cut the unemployment rate by a percentage point, United Press International reported on Friday.” (Mackenzie Weinger, “Moody’s: Obama Plan Will Add 1.9M Jobs,” Politico, 9/9/11)

Zandi’s Predictions For The Effects Of The First Stimulus Were Overly Optimistic, In Some Cases Twice As Optimistic As What Ultimately Occurred

In 2010, Mark Zandi And Alan Blinder Predicted That The Stimulus Would Increase Payroll Employment To 132.2 Million Jobs By The End Of 2011. (Mark Zandi and Alan Blinder, “How The Great Recession Was Brought To An End,” Moody’s Analytics, 7/27/10)

  • As Of August 2011, Payroll Employment Is At 131.1 Million. The Economy Would Need To Add Over 250,000 Jobs A Month To Meet Zandi And Blinder’s Prediction. (Bureau Of Labor Statistics, BLS.gov, Accessed 9/9/11)
  • In August, The Economy Added Zero (0) Jobs. (Bureau Of Labor Statistics, BLS.gov, Accessed 9/9/11)

In 2010, Zandi And Bliner Predicted That Payroll Employment Would Grow At A Rate Of 1.4 Percent In 2011. (Mark Zandi and Alan Blinder, “How The Great Recession Was Brought To An End,” Moody’s Analytics, 7/27/10)

  • To Date, Payroll Employment Has Only Grown By A Rate 0.6 Percent In 2011. (Bureau Of Labor Statistics, BLS.gov, Accessed 9/9/11)

In 2010, Mark Zandi And Alan Blinder Predicted That The Economy Would Grow At An Annualized Rate Of 3.6 Percent In 2011 And 5.1 Percent In 2012. (Mark Zandi and Alan Blinder, “How The Great Recession Was Brought To An End,” Moody’s Analytics, 7/27/10)

  • Now, The Blue Chip Forecast For Growth In 2011 Is Just 1.8 Percent And 2.5 Percent In 2012. In Short, The Economy Is Expected To Grow Half As Rapidly As Zandi And Blinder Predicted. (Office Of Management And Budget, “Fiscal Year 2012, Mid-Session Review,” WhiteHouse.gov, 9/1/11)

Zandi And Blinder Predicted That In 2011 The Economy Would Be Adding 200,000 Jobs A Month “As The Economy Gains Traction.” “But by this time next year, the economy gains traction as businesses respond to better profitability and stronger balance sheets by investing and hiring more. In the baseline scenario, real GDP, which declined 2.4% in 2009, expands 2.9% in 2010 and 3.6% in 2011, with monthly job growth averaging near 100,000 in 2010 and above 200,000 in 2011.” (Mark Zandi and Alan Blinder, “How The Great Recession Was Brought To An End,” Moody’s Analytics, 7/27/10)

Zandi And Blinder: “Under the baseline scenario, which includes all the financial and fiscal policies, and is the most likely outlook for the economy, the recovery that began a year ago is expected to remain intact.” (Mark Zandi and Alan Blinder, “How The Great Recession Was Brought To An End,” Moody’s Analytics, 7/27/10)


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