No doubt Alan Krueger reputation as one of the leading labor economists is what led President Barack Obama to tap him to be chairman of the White House Council of Economic Advisers.
Krueger’s reputation as a leading economist is well-deserved, as is evidenced by endorsements from several other top economists. But it’s not clear that this will lead to a panacea for our dogged joblessness problem.
Economists in general have done a poor job of predicting or explaining both the loss of jobs following the financial crisis, or the failure of businesses to create jobs as we recovered. During the crisis, the unemployment rate jumped by far more than they would have predicted based on the economic contraction, for example.
Krueger himself made a pretty bad call on jobs earlier this year.
After the unemployment rate dropped more than expected at the end of last year and start of this year, Krueger wrote an opinion column in March for Bloomberg predicting that the decline in the unemployment would continue.
As it turns out, the unemployment rate climbed from almost the moment the column was published. In March, the rate was 8.8 percent, the lowest level since April of 2009. A month later, it had climbed to 9 percent. By June, we were up to 9.2 percent.
Krueger might be a great economist. But he’s not a flawless forecaster.
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