Too Low a Bar
by Paul Krugman

John Snow, the Treasury secretary, told The Times of London on Monday that he expected the U.S. economy to add two million jobs before the next election — that is, almost 200,000 per month. His forecast was higher than those of most independent analysts; nothing in the data suggests that jobs are being created at that rate. (New claims for unemployment insurance are running at slightly less than 400,000 a week, the number that corresponds to zero job growth. If jobs were being created as rapidly as Mr. Snow forecasts, the new claims number would be closer to 300,000.)

Still, Mr. Snow may get lucky, and the job market may pick up. But his prediction was a huge climb-down from administration predictions earlier this year, when the White House insisted that it expected the economy to add more than five million jobs by next November.

And even if Mr. Snow's forecast comes true, that won't vindicate the administration's economic policy. In fact, while private analysts are criticizing Mr. Snow for being overly optimistic, I think the stronger criticism is that he's trying to lower the bar: to define as success a performance that, even if it materializes, should really be considered a dismal failure.
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Stiglitz Strikes Again

A reader (who might want to remain anonymous, so I'll just call him/her T.A.) e-mailed me an interview in the Guardian with Joe Stiglitz, the Nobel Prize-winning former chairman of Clinton's Council of Economic Advisors. It's worth a read:

Blowing the whistle on Dubyanomics

'More jobs have been lost under Bush than since Herbert Hoover and the Great Depression,' he said in an interview. 'In the private sector more money has been wasted through misallocation of capital in the stock-market bubble than the government could ever manage.'

In a week in which US stock markets hit 16-month highs, surely there is some room for optimism? Stiglitz was having none of it. 'The huge tax cut in the US was very badly designed to stimulate the economy. And there has been a huge increase in mainly military spending. Yet what is remarkable is how little stimulus has been given. The US economy is still in a precarious state,' he said...

'Dealing with the deficit will absorb the US political economy for years to come. We're back to the Reagan era. The trade deficit has the underlying problem of what will happen when foreigners decide to stop funding the US deficit. On the private side there is a huge gap in private pension funds. Any other economy would be under water.'