Yale Economic Model Still Predicts Bush Landslide in November

Yale - Fairmodel Presidential Equation ^ | February 14, 2004 | nwrep

[raloxk]

There was an excellent atricle in BLOOMBEG.com by Carloyn Buam about why jobs have been so slow to come back. Most people have focused on productivy growth and she conceeded that fact(off shoring is reponsible for at most 15,000-20,000 jobs per month and does not explain why the economy is creating 100,000 jobs per month and not 300,000 as it should).

She said that just as there as an over-investment in capital in the late 1990s, there was an over-investment in labor as well. Corporate profits as measured by National Income Accounts, peaked in 4Q 1997. However, even as profits fell from 1998-2000, over 8 million new jobs were added. Now what is happening is that over-investment has to be worked off.

[Nick Danger]

Since a recession is by definition "two consecutive quarters of declining GDP" it is safe to conclude that there was no recession in 2002 no matter what happened in the 2nd and 4th quarters.

You appear to be defining "by definition" to mean "the NBER says so." By that definition, there was no recession in 1992.

But there's another definition. It's the definition used by Democrats, and the press. In their definition, a recession (they use the term "Worst Economy in 50 Years") is defined as "three consecutive quarters prior to a presidential election in which the Democrats hope to unseat the Republicans."

I think there's a lot of that going on here.

Fundamentally, you have been selling two propositions here: (1) there is no recession because the NBER says so, and (2) the economy sucks. If that isn't straight out of the Clinton Playbook, I don't know what is.

[AntiGuv]

What is your point? I certainly never said there was a recession in 1992; the recession that began July 1990 ended March 1991.

I think the economy is weak and have never made any secret of that. Whether it's weak enough for Bush to lose reelection is another matter altogether. I don't think it is, but that is only because of 9/11. If 9/11 had never taken place, there is not the slightest doubt in my mind that Bush would be headed toward a landslide defeat.

FWIW, the economy is not nearly as weak as I had expected a year ago it would be at this point.