Lan­hee Chen and Mitt Romney

On June 13th, Mitt Rom­ney pol­icy direc­tor Lan­hee Chen posted a blog on the Rom­ney web site titled “Taxed and Spent: Amer­i­can Work­ers Suf­fer­ing Under Obama”. Fol­low­ing is the first paragraph:

Pres­i­dent Obama’s poli­cies have failed the Amer­i­can peo­ple. And nowhere has this fail­ure been more evi­dent than in this Administration’s han­dling of our nation’s econ­omy. In the month that Pres­i­dent Obama was inau­gu­rated, the unem­ploy­ment rate was 7.8%, the national debt stood at $10.6 tril­lion, and the aver­age price for a gal­lon of gas was $1.83. Today, in the third year of his pres­i­dency, unem­ploy­ment has bal­looned to 9.1%, the national debt tops $14 tril­lion, and Amer­i­cans are pay­ing double—$3.70 a gallon—for gas.

These num­bers are accu­rate inso­far as they go. The Fed­eral Reserve web site shows that the employ­ment rate was 7.8% on Jan­u­ary 1st, 2009 and is 9.1% as of May 1st, 2011. Note, how­ever, that the unem­ploy­ment rate reached 9.4% in May, just four months after Obama was inau­gu­rated, and reached the max­i­mum of 10.1% in Octo­ber, just nine months after.

As I pre­vi­ously dis­cussed in “Job Growth under Bush and Prior Pres­i­dents”, it makes far more sense to allow some time lag for eco­nomic poli­cies to take effect and/​or to mea­sure that effect over full busi­ness cycles. Accord­ing to the National Bureau of Eco­nomic Research (NBER), the reces­sion ended in June of 2009. The unem­ploy­ment rate was 9.5% at that time, and has improved since then. This improve­ment can be seen in the graph below.

The graph also shows that unem­ploy­ment was already on a steady rise at the time of the Obama inau­gu­ra­tion (red line).

Look­ing at the num­bers on Trea­sury­Di­rect, the national debt was about $10.6 tril­lion on Jan­u­ary 20, 2009 and is now about $14.3 tril­lion. As with the unem­ploy­ment rate, it makes sense to allow a time lag. The poli­cies for fis­cal year 2009, which ended on Sep­tem­ber 30, 2009, were pro­posed by Pres­i­dent Bush and passed by the exist­ing Con­gress. The prior link shows the national debt on Octo­ber 1, 2009, the first year of Obama’s first fis­cal year, to have been $11.9 tril­lion, a full $1.3 tril­lion above the num­ber given on Romney’s blog. This seems like the ear­li­est point at which Obama’s per­for­mance should be mea­sured. As with the unem­ploy­ment num­bers, it can even be argued that the first two years, 2009 and 2010, should to be skipped or ignored as they are heav­ily affected by prior eco­nomic policies.

Finally, the U.S. Energy Infor­ma­tion Admin­is­tra­tion and zFacts both sug­gest that Romney’s claims regard­ing the price of gaso­line are accu­rate. But note in the zFacts graph that the price was $4.26 per gal­lon on July 7, 2008, just a few months before Obama’s inau­gu­ra­tion, and hap­pened to have been near a local low at inau­gu­ra­tion. In addi­tion, the recent rise is cor­re­sponds with the recent con­flicts in Libya and other oil-​​producing states. Thus, it seems dif­ficult to draw any con­clu­sions of Pres­i­den­tial cul­pa­bil­ity in the change in gas prices.

All of above shows how impor­tant it is to look at sta­tis­ti­cally sig­nif­i­cant data sets for eco­nomic causal­ity, rather than just a few, iso­lated num­bers. This is espe­cially true when the num­bers and causal accu­sa­tions come from a par­ti­san source, who may have cherry-​​picked or oth­er­wise manip­u­lated them.

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