Austan Goolsbee: No Economic Crisis

WASHINGTON – Austan Goolsbee, still at this moment chairman of President Obama’s Council of Economic Advisers, is clearly tired of hearing talk about the supposedly desperate state of the American economy.

On the heels of the latest government snapshot of the labor market, which showed the economy gaining a paltry number of jobs in May while the unemployment rate climbed to 9.1 percent, Goolsbee pushed back with vehemence at the suggestion that the current state of play amounts to a crisis. He insisted that the economy is improving, even if there is still a slog to come.

"We do not have a sense of panic from one month’s jobs numbers, nor should we be having a sense of panic in general," Goolsbee said, speaking to a gathering of personal finance writers and editors at the White House on Wednesday. "Over the last six months, we have had added a million jobs in the private sector, which the president’s the first to say 'That’s not enough. We’ve got to do more, and get that higher.' But I really do not think that you take a variable series like the monthly job numbers, you don’t want to overreact to one month’s numbers that are different from what has been the trend."

Goolsbee looked and sounded much like a man eager to escape the torturous arguments of Washington for his old academic trappings at the University of Chicago –- a transition now set to happen in September. He betrayed impatience with the intersection of his profession and the policy arena, where fact and perception have a way of commingling.

Since the disappointing jobs report was released last week, the nature of the American conversation has changed. Major investment houses have downgraded their forecasts for economic growth, and some professional economists have begun prognosticating about the possibility of another recession.

The economist Dean Baker, critical of what he has portrayed as the Obama administration’s embrace of austerity as the cure-all for an economy that badly needs a jolt of government largess, recently authored a piece suggesting that something like a repeat of the Great Depression is now more than imaginable.

Stories of bankruptcy filings and foreclosed homes piling up, pulling housing prices down, fill the airwaves. The news serves up endless examples of the disconnect between the corporate realm, where profits and bonuses proliferate, and the reality of life for most working people, for whom economic anxiety is rarely far away.

In many houses, crisis remains a permanent state of affairs, each day bringing another impossible arithmetic test involving not enough dollars to pay the bills. But not at the White House, apparently, where the math focuses on how to trim the budget. For those who might have hoped the last jobs report would alter that mindset, Goolsbee had little but disdain.

"People were too quick to in my view, jump to the negative,”"he said, repeating the data that that the economy has gained a million net jobs over the past six months. "That's respectable. It's not stellar, but its definitely solid."

He sought refuge in a paperback book with a black cover, the administration’s official economic forecast, released early this year. It showed that the economy would average 9.3 percent unemployment this year. Here it is, only June, and we can celebrate the fact that we have already gotten below that number.

"Thus far, we have actually been somewhat significantly ahead of that forecast, when we made it," Goolsbee said.

On Wall Street, this is known as the bad news being priced in. The market expects company X’s earnings statement to show it has been hemorrhaging money, and then the number comes out awful indeed, yet a smidgen better than consensus. Investors buy the stock, pleased by the upside surprise.

But that standard, when applied to American joblessness, surely sounds ridiculous to most ordinary people, living proof that economists occupy a different sort of reality than the rest of us.

With one foot already back in academia, Goolsbee was content to let others try to fashion a view that might instill confidence; a frame that might inspire employers to hire, and consumers to spend anew, distributing dollars through a stagnant economy.

"I have a Ph.D. in economics," he said, referring to the discipline that, not for nothing, is known as the dismal science. "If you’re relying on me for your message, you’re making a terrible mistake."