Noam Scheiber is right; David Gregory did not acquit himself well in his Sunday interview with Larry Summers, in which the host repeatedly suggested that since the unemployment rate was higher than predicted the stimulus had necessarily failed and should be repealed because of deficit concerns.
This is wrong on two levels. First, as Mr Scheiber notes, Mr Gregory fails to understand that improvement off a lower than anticipated baseline might still generate a worse unemployment rate than forecast. And second, this is not the time to be focused on closing the deficit, and the stimulus is fairly insignificant so far as long-run budget problems are concerned.
Stepping back a little, Mr Gregory reflects the view of much of the press corps in that his outlook has not really internalized new information about the recession as it has come in. And that new information has been important.
When the Bureau of Economic Analysis released its latest revision of recent output numbers, it painted a picture of an economy that was far weaker in 2008 than originally thought. It had long seemed that NBER might have jumped the gun in putting the beginning of the downturn in the fourth quarter of 2007, but the latest figures strongly support that timeline. Output actually shrank in the first quarter of last year, growth in the second quarter was much weaker than originally reported, and contraction in the third quarter was very substantial indeed—output fell at a 2.5% annual pace. So policymakers have been operating with a picture of the economy that is overly rosy.
And as Brad DeLong notes, even taking into account those weaker-than-expected numbers, unemployment has risen much higher given the output decline than is normally the case in recessions. This downturn is unexpectedly deep and atypically bad for labor markets, but the political discourse has not changed in light of these data points.
This article originally appeared on The Economist.com