Here’s the story: Economists Hilariously Over-Predicted Economic Growth Under Obama. What does an economist using modern macro know about how an economy works? To find out, continue below.
White house economists overestimated annual economic growth by about 80 percent on average for a six year stretch during Barack Obama’s presidency, according to Freedom Works economic consultant Stephen Moore.
Economists predicted growth between 3.2 to 4.6 percent for the years 2010 through 2015. Actual economic growth never hit above 2.6 percent.
“Why does anyone bother to listen to economists anymore?” Moore writes in The Washington Times. “Almost all of the economics profession … bought into the Keynesian idea that what would revive the economy after the Great Recession of 2008-09 was massive government spending ‘stimulus.’ The trillions of dollars of government borrowing here and abroad created a decade-long anemic recovery.”
Keynesian economic thought dominated Obama’s economic policy after the Great Recession, economics professor Richard McKenzie wrote for the Foundation of Economic Education in 2010.
The Keynesian/Obama approach to recovery meant the federal government would engage in deficit spending in order to stimulate the economy. The logic, McKenzie writes, was that deficit spending would go, directly or indirectly, into the pockets of Americans, giving them the ability and will to spend.
According to Keynesian thought, as money circulates in the economy, the government’s initial investment could multiply to a total economic benefit five or 10 times greater than the original stimulus, McKenzie wrote.
Moore blames this thread of thinking for stunting growth that could have been a more vibrant recovery.
“For much of America this has been a long recession, not a long recovery. We are suffering from a severe growth deficit,” Moore writes. “Nearly every policy during the Obama years was anti-growth … If Mr. Trump is able to to shift those policies into reverse — especially by getting tax rates down, not up — 3 to 4 percent growth is easily achievable.”
Have I mentioned that the the third edition of my Free Market Economics has now been published.