The Importance of Good Statistics

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Ryan Avent reviews some ancient history today. As we all know, the 2009 stimulus package was smaller than it should have been given what we knew at the time. But it was way smaller than it should have been if we’d only known what was really going on. The House passed an $800 billion stimulus bill on January 26th:

Two days after that, Americans received grim news about the economy: in the fourth quarter of 2008, GDP contracted at a 3.8% annual pace—the worst quarterly performance since the deep recession of 1982….Unfortunately, the situation was far more dire than anyone in the administration or in Congress supposed.

Output in the third and fourth quarters fell by 3.7% and 8.9%, respectively, not at 0.5% and 3.8% as believed at the time. Employment was also falling much faster than estimated. Some 820,000 jobs were lost in January, rather than the 598,000 then reported. In the three months prior to the passage of stimulus, the economy cut loose 2.2m workers, not 1.8m. In January, total employment was already 1m workers below the level shown in the official data.

So what would Obama have proposed if he’d known that GDP had just contracted by 8.9% instead of 3.8%? Beats me. But even as cautious as he is and as mainstream as his advisors were, surely a recession that was more than twice as bad as they thought would have produced a stimulus that was something on the order of twice as big. I’ve never thought that the difference between, say, an $800 billion stimulus and a $1 trillion stimulus was a very big deal, but the difference between an $800 billion stimulus and a $1.6 trillion stimulus sure would have been.

BEA has a long track record of not doing a good job on GDP figures when the economy is turning sharply. It’s too late to cry over spilt milk now, but if there’s a way to get better at this it might help us out next time.

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GREAT JOURNALISM, SLOW FUNDRAISING

Our team has been on fire lately—publishing sweeping, one-of-a-kind investigations, ambitious, groundbreaking projects, and even releasing “the holy shit documentary of the year.” And that’s on top of protecting free and fair elections and standing up to bullies and BS when others in the media don’t.

Yet, we just came up pretty short on our first big fundraising campaign since Mother Jones and the Center for Investigative Reporting joined forces.

So, two things:

1) If you value the journalism we do but haven’t pitched in over the last few months, please consider doing so now—we urgently need a lot of help to make up for lost ground.

2) If you’re not ready to donate but you’re interested enough in our work to be reading this, please consider signing up for our free Mother Jones Daily newsletter to get to know us and our reporting better. Maybe once you do, you’ll see it’s something worth supporting.

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