More Economic Cluelessness from Economists

So there I was this morning, after my usual morning search for something approaching a full time job in my chosen career (generally unsuccessful of course) and going on to the standard search of the various news sites just to see what is happening in the world around us, I came across this article over at CNN:

Economists' biggest worry: Federal budget deficit

Once again, when I think I have seen just how totally clueless economists are, it is articles such as this that let me know we still have such a long way to go. From the article:

NEW YORK (CNNMoney) -- Government deficits are the biggest long-term worry of top U.S. economists, according to a survey released Monday.

The survey of 47 top economists by the National Association of Business Economics predicted that the Federal deficit will jump to $1.4 trillion in the fiscal year ending in September. In the November survey, the economists had forecast a $1.1 trillion deficit.

...snip...

The previous survey was taken before Congress agreed to extend Bush-era tax cuts for all income brackets and have a one-year holiday on a portion of the payroll tax. The payroll tax holiday, which hadn't been widely expected, by itself added about $112 billion to the federal deficit.

Asked to rank the seriousness of various economic problems, with one meaning no concern and five equaling extreme concern, the federal deficit was the biggest worry, with an average score of 4.1.

Why do I think most of these 47 economists that were polled probably supported the Tax Cut extensions?

To be honest, I really don't know what to think about all this. The poll was conducted for and released by the National Association of Business Economics. Back in April 2010, they conducted a poll of 68 members and concluded at the time that the $787 Billion Stimulus passed in February 2009 was not effective. From CNN's article on the April '09 poll:

In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years -- but a majority of respondents felt the fiscal stimulus had no impact.

NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House's Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.

That sentiment is shared for the recently passed $17.7 billion jobs bill that calls for tax breaks for businesses that hire and additional infrastructure spending. More than two-thirds of those polled believe the measure won't affect payrolls, while 30% expect it to boost hiring "moderately."

They may in fact be correct that the stimulus was ineffective as Paul Krugman has stated more than once that the stimulus as passed was too small so maybe that's what the NABE polling was indicating last year.

NABE does sometimes seem to recognize unemployment (and presumably underemployment) as an issue. In a NABE poll from Oct 2009, their forecast was that it would be 2012 before the jobs lost during the Great Recession would be replaced:

Economists surveyed by the National Association for Business Economics said any recovery is likely to be so gradual that these jobs won't return to the labor market for three years.

Less than 8% of the 44 economists surveyed expect to regain the lost jobs before 2012. About 54% expect to see the loss fully reversed by 2012. At the same time, 33% project it will take until 2013 to recover the lost jobs. Five percent say it will take even longer.

The thing about all this is, if all of us who are among the long term un and underemployed could once again find decent jobs that allow us to support ourselves, pay taxes, and participate in more than just subsistence level parts of the economy, the impact would have to have an impact on deficits, not only at the federal level but for states and municipalities as well. Return us to the status of full participation in the economy, and the revenue streams for all would be increased as well as re-filling the emptied coffers due to the need for services. Is it a chicken and egg effect at work? Which is the symptom and which is the cause? From my admittedly limited perspective, it seems that jobs is the primary economic issue with the deficits being a fall out of the lack of jobs.

Nevertheless, as a Bloomberg (via MSNBC) article I linked to yesterday in my post We Are Seeing the Destruction of the Middle Class concluded:

The bottom line: Newly created jobs tend to be lower-paying than those they replaced. That will constrain consumer spending and economic growth.

Really, the only thing I am confident in predicting myself is that no matter what happens over the next few months and years with the US economy, economists will be surprised.

And because I can: