My friend David Altig does his best to defend that speech from Karl Rove that we attacked here. David’s defense of Mr. Rove goes like this – the growth rate of real GDP and employment started to slow in late 2000, which is factually true.
At the risk of repeating myself, let me kindly suggest why this defense really does not justify the often heard claims that the recession started before Bush took office by copying my second comment to David’s post:
As I re-read your evidence for a “downturn” that occurred before 2001, I have to cry FOUL. A reduction in the GROWTH RATE of real GDP is not the same thing as a decline in real GDP. I don’t think any economist would have found it prudent to maintain a growth rate in aggregate demand that was in excess of the growth rate of potential GDP past mid-2000. Unless you believe – which I’m sure you don’t – that we were below full employment as of 2000QII, one would have welcomed some slowing of real GDP growth.
I’ll concede that Rove was more guilty of extreme spinning than lying – given that modern political correctness almost rules out the possibility that anyone is ever guilty of lying no matter how they twist facts in order to deceive. But I have no clue why a sensible and honest conservative economist like David Altig feels the need to defend the free lunch supply-side spin from this White House. David?