An NYT piece discussing the Obama's administration's plans to provide further stimulus to the economy implies that the economy is somehow doing better than expected. At one point commenting that: "the $787 billion recovery plan was intended to stretch over two years, partly in anticipation that the downturn would be prolonged." This sentence appeared after it told readers: "Democrats in Congress generally agree with the White House that a second full-blown stimulus package is not needed, barring an economic relapse." In fact, the economy is performing considerably worse than CBO and most other analysts had projected when the stimulus package was designed last winter. They had expected unemployment to peak at a bit over 9.0 without stimulus. Instead, unemployment is virtually certain to peak at a level well over 10.0 percent even with the benefit of the stimulus package. If the Democrats in Congress agree that a full-blown stimulus package is not needed then they believe that it is okay that unemployment averages 10.2 percent next year, 9.1 percent in 2011 and 7.7 percent in 2012, at least if they accept CBO's projections. It might have been worth pointing out that the baseline projection shows the unemployment rate will be above the peak of the last year recession for close to four years. It would have been helpful to include some longer term economic projections in this discussion. No one could make any sense of a decision to support further stimulus without a knowledge of these projections. It is unlikely that most NYT readers are aware of these projections.
--Dean Baker
