Tag Archive for 'Pelosi'


Perspective (Comparing Recessions)

This is quite a long post.  I hope you’ll be patient and read it all – there are plenty of pretty graphs!

I have previously spoken about the need for some perspective when looking at the current recession.  At the time (early Dec 2008), I was upset that every regular media outlet was describing the US net job losses of 533k in November as being unprecedentedly bad when it clearly wasn’t.

About a week ago, the office of Nancy Pelosi (the Speaker of the House of Representatives in the US) released this graph, which makes the current recession look really bad:

Notice that a) the vertical axis lists the number of jobs lost and b) it only includes the last three recessions.  Shortly afterward, Barry Ritholtz posted a graph that still had the total number of jobs lost on the vertical axis, but now included all post-World War Two recessions:

Including all the recessions is an improvement if only for the sake of context, but displaying total job losses paints a false picture for several reasons:

  1. Most importantly, it doesn’t allow for increases in the population.  The US residential population in 1974 was 213 million, while today it is around 306 million.  A loss of 500 thousand jobs in 1974 was therefore a much worse event than it is today.
  2. Until the 1980s, most households only had one source of labour income.  Although the process started slowly much earlier, in the 1980s very large numbers of women began to enter the workforce, meaning that households became more likely to have two sources of labour income.  As a result, one person in a household losing their job is not as catastrophic today as it used to be.
  3. There has also been a general shift away from full-time work and towards part-time work.  Only looking at the number of people employed (or, in this case, fired) means that we miss altogether the impact of people having their hours reduced.
  4. We should also attempt to take into account discouraged workers; i.e. those who were unemployed and give up even looking for a job.

Several people then allowed for the first of those problems by giving graphs of job loses as percentages of the employment level at the peak of economic activity before the recession.  Graphs were produced, at the least, by Justin Fox, William Polley and Calculated Risk.  All of those look quite similar.  Here is Polley’s:

The current recession is shown in orange.  Notice the dramatic difference to the previous two graphs?  The current recession is now shown as being quite typical; painful and worse than the last two recessions, but entirely normal.  However, this graph is still not quite right because it still fails to take into account the other three problems I listed above.

(This is where my own efforts come in)

The obvious way to deal with the rise of part-time work is to graph (changes in) hours worked rather than employment.

The best way to also deal with the entry of women into the workforce is to graph hours worked per member of the workforce or per capita.

The only real way to also (if imperfectly) account for discouraged workers is to just graph hours worked per capita (i.e. to compare it to the population as a whole).

This first graph shows Weekly Hours Worked per capita and per workforce member since January 1964:

In January 1964, the average member of the workforce worked just over 21 hours per week.  In January 2009 they worked just under 20 hours per week.

The convergence between the two lines represents the entry of women into the workforce (the red line is increasing) and the increasing prevalence of part-time work (the blue line is decreasing).  Each of these represented a structural change in the composition of the labour force.  The two processes appear to have petered out by 1989. Since 1989 the two graphs have moved in tandem.

[As a side note: In econometrics it is quite common to look for a structural break in some timeseries data.  I’m sure it exists, but I am yet to come across a way to rigorously handle the situation when the “break” takes decades occur.]

The next graph shows Year-over-Year percentage changes in the number of employed workers, the weekly hours per capita and the weekly hours per workforce member:

Note that changes in the number of workers are consistently higher than the number of hours per workforce member or per capita.  In a recession, people are not just laid off, but the hours that the remaining employees are given also falls, so the average number of hours worked falls much faster.  In a boom, total employment rises faster than the average number of hours, meaning that the new workers are working few hours than the existing employees.

This implies that the employment situation faced by the average individual is consistently worse than we might think if we restrict our attention to just the number of people in any kind of employment.  In particular, it means that from the point of view of the average worker, recessions start earlier, are deeper and last longer than they do for the economy as a whole.

Here is the comparison of recessions since 1964 from the point of view of Weekly Hours Worked per capita, with figures relative to those in the month the NBER determines to be the peak of economic activity:

The labels for each line are the official (NBER-determined) start and end dates for the recession.  There are several points to note in comparing this graph to those above:

  • The magnitudes of the declines are considerably worse than when simply looking at aggregate employment.
  • Declines in weekly hours worked per capita frequently start well before the NBER-determined peak in economic activity.  For the 2001 recession, the decline started 11 months before the official peak.
  • For two recessions out of the last seven – those in 1980 and 2001 – the recovery never fully happened; another recession was deemed to have started before the weekly hours worked climbed back to its previous peak.
  • The 2001 recession was really awful.
  • The current recession would appear to still be typical.

Since so many of the recessions started – from the point of view of the average worker – before the NBER-determined date, it is helpful to rebase that graph against the actual peak in weekly hours per capita:

Now, finally, we have what I believe is an accurate comparison of the employment situation in previous recessions.

Once again, the labels for each line are the official (NBER-determined) start and end dates for the recession.  By this graph, the 2001 recession is a clear stand-out.  It fell the second furthest (and almost the furthest), lasted by far the longest and the recovery never fully happened.

The current recession also stands out as being toward the bad end of the spectrum.  It is the equally worst recession by this point since the peak.  It will need to continue getting a lot worse quite quickly in order to maintain that record, however.

After seeing Calculated Risk’s graph, Barry Ritholtz asked whether it is taking longer over time to recover from a recession recoveries (at least in employment).  This graph quite clearly suggests that the answer is “no.”  While the 2001 and 1990/91 recessions do have the slowest recoveries, the next two longest are the earliest.

Perhaps a better way to characterise it is to compare the slope coming down against the slope coming back up again.  It seems as a rough guess that rapid contractions are followed by just-as-rapid rises.  On that basis, at least, we have some slight cause for optimism.

If anybody is interested, I have also uploaded a copy of the spreadsheet with all the raw data for these graphs.  You can access it here:  US Employment (excel spreadsheet)

For reference, the closest other things that I have seen to this presentation in the blogosphere are this post by Spencer at Angry Bear and this entry by Menzie Chinn at EconBrowser.  He provides this graph of employment versus aggregate hours for the current recession only:

Alex Tabarrok has also been comparing recessions (1, 2, 3).


I was right, pretty-much-right and wrong all at once!

The girl’s got spunk. Back on the 20th of Feb, I predicted that while Hillary Clinton would win the popular vote in Ohio and Texas, she would barely win in the pledged delegates from those states. On that basis, I further predicted that Clinton would be written off by the 10th of March, even if she hadn’t conceded yet.

As evidence that you should always quit while you’re ahead, I was right on the first prediction, pretty-much-right on the second and, it would seem, not even close to being right on the third. Clinton won the popular vote in both states (1.46 million vs. 1.36 in Texas, 1.21 vs. 0.98 in Ohio). In the pledged-delegate counts, Clinton currently leads 92-91 in Texas (10 still too close to call) and 74-65 in Ohio (2 still too close to call). My prediction was bang on the money in Texas, but arguably a bit wide of the mark in Ohio. But when it comes to considering the on-going Clinton campaign, nobody is talking about Howard Dean tapping Clinton on the shoulder for a quiet chat now; all talk is about Pennsylvania in six weeks’ time.

That is a remarkable story and not because of the 3am telephone call or Obama’s views on NAFTA (although those certainly helped Clinton), but because of the successful lowering of expectations that the Clinton campaign managed to bring about. Immediately after Wisconsin and Hawaii, all talk was that Clinton needed to win, and win big, in both Texas and Ohio in order to go on. A week ago the talk was that she could justify going on if she won with a wide margin in at least one of them. In the day or two before, the word was that she would push on if she at least one the popular vote in one of the two. That lowering of expectations meant that when she won both popular votes by a solid margin and both delegate counts (albeit by small margins), it looks like a blow-out for her and gives the impression of renewed momentum.

My original observation, that Barack Obama has been in front since day one, still holds true. Using the data at Real Clear Politics, the running totals for pledged delegates have been:

Date Barack Obama: running total Barack Obama: share of pledged delegates Hillary Clinton: running total
3 Jan (IA) 16 51.6% 15
8 Jan (NH) 25 51.0% 24
19 Jan (NV) 38 51.4% 36
26 Jan (SC) 63 56.8% 48
5 Feb (Super Tuesday) 906 50.8% 876
9 Feb (LA, NE, WA, Virgin Is.) 1012 52.1% 931
10 Feb (ME) 1027 52.2% 940
12 Feb (DC, MD, VA, Dem.s Abroad) 1137 53.2% 1001
19 Feb (HI, WI) 1193 53.5% 1038
04 Mar (OH, RI, TX, VT) 1366 52.8% 1222

obama-ahead-08-03-06.jpg


Two weeks to go

Continuing on my theme of predicting that the winner among the pledged delegates will win the Democratic Party’s nomination because the super delegates will (probably) flock to the leader among pledged delegates in order to build the appearance of unanimity and avoid a floor fight at the convention (see here and here), I’ve updated my table. I’m now using the data from Real Clear Politics for no particular reason beyond ease of extraction.

Date Barack Obama: running total Barack Obama: share of pledged delegates Hillary Clinton: running total
3 Jan (IA) 16 51.6% 15
8 Jan (NH) 25 51.0% 24
19 Jan (NV) 38 51.4% 36
26 Jan (SC) 63 56.8% 48
5 Feb (Super Tuesday) 906 50.8% 876
9 Feb (LA, NE, WA, Virgin Is.) 1012 52.1% 931
10 Feb (ME) 1027 52.2% 940
12 Feb (DC, MD, VA) 1134 53.2% 996
19 Feb (HI, WI) 1185 53.6% 1024

obama-ahead-08-02-20.jpg

The RCP data still include estimates and don’t include 56 delegates that have nominally already been allocated (26 are with Edwards, 30 RCP aren’t willing to estimate one way or the other, but since 10 of those 30 are in Hawaii, it seems safe to say that they’ll break for Obama overall). For the sake of simplicity, let’s assume that the 56 break down as 30 to Obama and 26 to Clinton (that’s 53.5% of them to Obama). That gives us 1215 for Obama and 1050 to Clinton to-date.

There are 988 pledged delegates to go (giving 3253 in total). To win the pledged delegates race, a candidate needs 1627. That means that Obama only needs 412, or 41.7%, of the remaining 988 to-be-pledged delegates. Clinton needs 577, or 58.4%, of the remainder.

As an indication of how tough that will be, Clinton’s best vote performance so far was 57% in New York. She has only managed to break 55% of delegates pledged in 9 out of 37 primaries/caucuses so far and that’s including American Samoa that only had three delegates to give. If she is going to do it, her wins in Texas (193 to-be-pledged delegates) and Ohio (141) will need to be huge. I just can’t see it happening.

The polls do have Clinton up with 50.2% vs. 42.6% in Texas and 52.7% vs. 38.0% in Ohio on average. That’s a pretty big undecided gap, but I can’t see it all breaking for Clinton given the apparent movement towards Obama in the more recent polls. By comparison, the betting markets at InTrade put Obama at a 68% chance of winning in Texas and a 49% chance of winning in Ohio. I suspect that the betting market is a little overly pro-Obama, just as it was in the lead-up to New Hampshire, but just like in New Hampshire, I think that although Hillary Clinton will win the headline vote, she’ll barely win in the delegates pledged.

So, my prediction: Come the 5th of March, Obama will still be ahead in pledged delegates and will probably still be ahead after adding in the ridiculously apportioned super-delegates by the Main Stream Media estimates. Look for it to be all over bar the shouting in two weeks.


Are we at the tipping point?

Just after the Maine primary, I wondered whether Obama may have been in front all along on the basis that he has been ahead all the way in pledged delegates and the super delegates will probably flock to the leader among pledged delegates in order to build the appearance of unanimity and avoid a floor fight at the convention.

We’ve just had the primaries in Virginia, Maryland and the District of Columbia and as expected, Barack Obama appears to have won all three by strong margins. Here are the updated table and graph, although the data for the 12th of February are still very much estimates:

Date Barack Obama: running total Barack Obama: share of pledged delegates Hillary Clinton: running total Hillary Clinton: share of pledged delegates
3 Jan (IA) 16 51.6% 15 48.4%
8 Jan (NH) 25 51.0% 24 49.0%
19 Jan (NV) 38 51.4% 36 48.6%
26 Jan (SC) 63 56.8% 48 43.2%
5 Feb (Super Tuesday) 903 50.1% 898 49.9%
9 Feb (LA, NE, WA, Virgin Is.) 998 51.4% 944 48.6%
10 Feb (ME) 1013 51.5% 953 48.5%
12 Feb (DC, MD, VA) 1111 52.5% 1006 47.5%

obama-ahead-08-02-13.jpg

And just as I predicted (well, Chris Bowers predicted and I agreed), we are starting to see twitchy movement in the super delegates. On the one hand, we have people calling for them to vote according to the will of their constituents. Ryan Avent is typical:

[I]t seems that Obama has an excellent chance at winning the District primary tomorrow. Should that be the case, it would be incredibly unfortunate if the District’s superdelegates essentially undid the wishes of the voting public … It is especially galling that D.C. Councilmembers, so familiar with the frustration of disenfranchisement, would contribute to the further erosion of the District’s electoral clout.

… and the super delegates are listening. Nancy Pelosi, Speaker of the House of Representatives and one of the most influential of currently-neutral super delegates, is “leaning” towards Obama:

A senior adviser to Nancy Pelosi, the Speaker of the House of Representatives, has suggested that she – along with other “party elders” – will step into the ring to end this extraordinary contest if it threatens Democratic hopes of winning back the White House or maintaining control over Congress. Ms Pelosi says that she is “torn” and that “the people will speak – that’s the beauty of a democracy,” before adding: “My focus is on re-electing a Democratic majority in the House of Representatives.”

Her voice would carry great authority among uncommitted super-delegates on Capitol Hill – and she is said to be “leaning” towards Mr Obama. “The party Establishment is not going to turn its back on a candidate who is generating this tremendous excitement and bringing all these new voters into the political process,” said a source close to her. Mr Obama’s team are pressing the same message, especially to members of Congress in districts where he has already won and who may not wish to alienate their core vote in an election year.