State economist Tom Stinson is probably too nice of a guy to say "I told you so" to Gov. Pawlenty. Besides, he's got his hands full finishing up what's reported to be a bleak Minnesota revenue forecast, which he'll deliver later this week.
But last February, Stinson said, "We're in a recession."
"Tom Stinson tends to be a bit on the pessimistic side of things, to put it charitably...I don't think it's helpful - unless it's clearly justified by the data - for people to get overly pessimistic or overly scare people, either," Gov. Tim Pawlenty said at the time.
Today, nine months later, the National Bureau of Economic Research has reached a conclusion that Stinson figured out nine months ago. The U.S. has been in a recession since December 2007.
If only this was a typical recession expected to last up to 18 months! We'd already be seeing a few bright lights at the end of the tunnel. We better be bracing ourselves for Stinson's forecast and hope we aren't overly scared.
First, a pessimist is just an optimist who is well-informed.
I guess that leaves out Tim Pawlenty.
Anybody who has been paying attention in the last 11 months, regardless of whether they have an economics degree or not, knows that we've been in a recession since December.
Before we bash Mr. Pawlenty, let's keep in mind that the duty of a leader is keep spirits up. We do not need to ride angst into a deeper recession.
At least fromt the Democrats, we can expect resounding good news and optimism regarding the economy - starting at noon EST on January 20, 2009.
Hypothetically, if Gov. Pawlenty had come out and said, "Yes, we're in a recession" at the time of Stinson's statement, would there have been any change in actions on Pawlenty's part? On the part of anyone else?
I thought that Pawlenty's statement was pretty unhelpful and dismissive, but his actions, if they were different, would have been the more interesting part.
"Before we bash Mr. Pawlenty, let's keep in mind that the duty of a leader is keep spirits up."
That may be one duty of a leader, but it is not the only one. Another duty might be to try to plan for contingencies, for instance, after chastising Mr Stinson, did Gov Pawlenty corner Tommy and try to find out why he said what he said? Or did he just play pollyanna and go on his merry way, spreading cheer and good tidings?
It could be worse:
Latvian Agents Detain a Gloomy Economist; 'It Is a Form of Deterrence'
One can keep spirits up without publicly humiliating a hard-working and important member of the team.
Whether there are Democrats or Republicans involved is utterly irrelevant.
Stinson deserved an apology. He was treated terribly. Not as political matter, as a personal one.
There was a good article in the Strib on Sunday about these people who put together the revenue forecast. Their job is a thankless one. It says a lot about Stinson and his team that they stuck around.
Why should Pawlenty "apologize" to Stinson?
Stinson made a public statement, the impact of which can and often is a self-fulfilling prophecy. The govenor then made a public statement to mitigate the effect of Stinson's statement.
What if Stinson had been wrong?
What would have been the impact of that?
It is not like Stinson was telling Pawlenty something in private and was smacked down.
Typically, non-elected civil servants are NOT ALLOWED to make public statements. That is up to the policy makers to do.
I noticed this little gem from the economic forecast.
"11:42: "This is troubling because the uncertainty isn't going to be resolved very quickly," Stinson. Warning: The forecast assumes the price of oil drops to $75 a barrel this summer. Likely?"
Now from MSNBC...
"Oil prices tumbled below $50 a barrel Monday as National Bureau of Economic Research reported that the U.S. economy has been in a recession since December 2007 and the Dow Jones industrial average fell nearly 700 points."
So how do we sort through projections based on the bobbling price of oil and the stock market tumbling on news of recession?
Maybe Stinson and Pawlenty should share a pitcher of beer and talk about each other's jobs. One can muse about forecasting, the other can muse about keeping forecasts from becoming a hopeless feedback loop.
No. Stinson wasn't the one who said oil wasn't likely to fall below $75 a barrel. I was. For an explanation of that, see the first line of the original post.
I saw that Bob, but I also saw that the forecast made assumptions about the price of crude.
Here is the deal.
Stinson's job is to make economic forecasts. Pawlenty's job is to make sure the public doesn't stampede because of bad economic news.
Both jobs can be at odds with the other.
I don't see where Pawlenty did anything wrong here?
I remember my dad not telling the kids that he was facing a lay-off. He told my mom and they discussed it in private.
During the time of his layoff, we had no idea how close the wolf was to the door.
Was my father lying to us?
Or was he doing his job as a parent?
In an economy when 10% of a retirees income can be wiped out on a rumor is it not the very definition of responsible goverance to present the numbers, but attempt to mitigate public fears at the same time?
Greg. Do the math on the average price of a barrel of oil since February. It's now around $50. I'm thinking it'll be close to $75 over the forecast period.
It's also an important detail to note that Stinson wasn't PREDICTING a recession. He was stating the status of the present. He said we were already in a recession.
And he was right.
Much like the story about the Emperor-Who-Wore-No-Clothes...one can be assured, everybody knew that the Emperor knew - the naked truth - but he didn't want to disturb the people... the naked truth now being a recession, another Depression...oil at $48 a barrel and falling...think of it as a calamity or a catharsis clearing the 'air' of our overt consumerism?
We can certainly survive the economic collapse nationally globally, as we may, hopefully survive George Bush's empirical military mess and continual assault on our civil liberties...then again, will we, who knows?
I have to point out again, one major component of Magic Plan economics ( cut taxes and wait for the magic to happen) is denial masquerading as optimism. In Pawlenty's case he and his Republican colleagues went beyond denial and were down right deceitful. They passed off Enron accounting as budget fixes for years. They actually lied in 2006 claiming a surplus when there was none. Like Bush, Pawlenty inherited a surplus, and tax cutted his way into deficits. Yes, the economy is bad, and we may we have ended up with a deficit in any event. The question is, had Pawlenty not spent his entire term cutting government revenue, how big would the deficit be today? And remember, the sales pitch was never less government for less money, anyone can do that. The Republican pitch has always been same government, or even better government for less money.
In fairness, Pawlenty isn't the only one who passed off denial as optimism, the consensus media in this country has done a pretty good job of ignoring economic reality as well.
Minnesota requires a balanced budget so the size of the deficit would probably be about the same. There would be a corresponding increase in spending if there were an increase in revenue.
Part of the mix here is Jesse Ventura's change in how education is funded. He took it primarily off the property tax and put it on the state. Of course there was another aspect of his plan that would have raised the revenue to allow that plan to succeed. But the Legislature, wasn't interested in that.
But it's not about optimism or pessimism and i get your "dig" Paul. It's about accurately indicating where we are at a given moment. Saying Stinson is a pessimist because he said we were in a recession, and saying I'm an optimist because I said the data available did NOT indicate thta it was a 1983 economy, are the same thing. Both statements are incorrect, fueled by an urge to use hyperbole in place of data.
Stinson is not a hyperbole guy. He's a data guy who is fueled by the quaint notion is you can't get your going if you don't know ACCURATELY where you are right now.
And it is not -- yet -- 1983, either. You simply cannot look at the number of unemployed people and reach that conclusion while ignoring the corresponding increase in the labor pool.
Stinson would never use that sort of math. And I'll hitch my wagon to him any day.
Data still matters more than rhetoric.
"But it's not about optimism or pessimism and i get your "dig" Paul. It's about accurately indicating where we are at a given moment. "
Relax, don't take everything so personally.
My point has ALWAYS been that optimism and pessimism are irrelevant, it's about the data, and economics is about commerce, not "feelings". There were those who argued at the time that the data showed we were in a recession, and that things were getting worse at that moment if you will, and they were right. Many of those debates played out here, the arguments revolved around what the real data concerning inflation, unemployment etc actually were, what are the real unemployment rates, inflation rates etc. So pick your moment, at any given moment there were those who more accurately predicted AND described the economy, not because they were pessimists or optimists, but because they were looking at the most useful data. It isn't that nobody knew, there were bodies that knew. It's an historical fact that the consensus media did NOT present those analysts and economists who have for over a year now argued that the economy was bad and getting worse. Why?
Where optimism and pessimism come into play is the coverage of the economy in the news media. You've stated yourself that you tilt towards optimism and that obviously affects the way you approach economic issues. When does optimism become denial?
As far as the state budget is concerned, yes law requires it to be balanced, but there are still surpluses and deficits, and as a general rule a surplus is better than a deficit. In 2001 we had a nine hundred million dollar surplus. Obviously fiscal policy i.e. revenue collection and expenditures play a huge role in determining our surplus/deficit status. It's silly to say that regardless of fiscal policy our deficit would be same, in fact it could be worse, or better. Policy matters.
I disagree. Economics is about "feelings", not numbers. When the market can shift 10% or 20% a day on "feelings" caused by "rumors", I hardly think we should be talking about data.
"feelings" is data.
That is why we have reports on consumer confidence.
Economist love to talk about numbers because they are rational and tangible.....but good economists understand terms like "irrational exuberance" and are acutely aware that things like "tulips" have destroyed the economy of nations.
That is why Gov. Pawlenty was wise to put a positive emotional spin on "bad numbers"
I disagree. Economics is about "feelings","
If this were true Greg, we would never have recessions as long as everyone felt "good" about the economy. It would be impossible to enter a recession as long as consumer confidence was high. Look at the history here, consumer confidence didn't predict the recession, it reacted to it. consumer confidence was up when the housing crash began, so obviously something other than "feelings" caused the recession.
The other thing you have to keep in mind is that the Stock Markets are not the whole economy, they are a part of the economy. While the stock markets volatility may be caused by irrational exuberance on occasion, thing like productivity and labor respond to commerce, not emotions.