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Chapter 20: Problem 14

In his 2016 State of the Union address, President Barack Obama observed that in the previous 70 months, the U.S. economy had created "more than 14 million new jobs." Is it likely that the U.S. economy created only 14 million jobs during this time period? If not, what was President Obama referring to?

Short Answer

Expert verified
It is likely that more than 14 million jobs were created in this period, given the economic growth and recovery from the financial crash during Obama's presidency. The phrase 'more than' suggests that 14 million is a conservative estimate, with the actual number likely higher. This statement could have been made to highlight the effectiveness of the Obama administration's policies in terms of job creation.

Step by step solution

01

Understand the claim

Read carefully the statement made by President Obama. 'More than 14 million new jobs' were created in the U.S. economy over the previous 70 months. This indicates an increase in the number of jobs, but does not specify if these jobs were part-time or full-time, or what industries they were in.
02

Analyze the statistic

Should the U.S. economy have created only 14 million jobs in this period, it would mean an average of about 200,000 jobs per month. That is quite a lot and, considering the significant economic growth and recovery from the financial crisis in this period, it is more likely to be higher than 14 million.
03

Interpret the statement

Pay attention to the phrase 'more than'. While it's uncertain exactly how many jobs were created in this period, the President was likely using 14 million as the lower limit - in other words, at least 14 million jobs were created, but it could be higher. His choice of using the phrase 'more than' was probably aimed at safely making a claim that wouldn't be refuted by future data or analysis.
04

Apply context

Consider the intention behind President Obama's statement. It's essential to remember that politicians often use statistics to highlight their achievements and efforts. So, in this case, President Obama's emphasis on job creation could be a way to showcase the effectiveness of his policies.

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Most popular questions from this chapter

In discussing the labor market during the recovery from the \(2007-\) 2009 recession, Federal Reserve Chair Janet Yellen noted that "the employment-to- population ratio has increased far less over the past several years than the unemployment rate alone would indicate, based on past experience." a. During an economic expansion, why would we normally expect the employment- population ratio to increase as the unemployment rate falls? b. Why didn't the employment-population ratio increase as much as might have been expected during the recovery from the \(2007-2009\) recession?

What are the problems in measuring the unemployment rate? In what ways does the official BLS measure of the unemployment rate understate the true degree of unemployment? In what ways does the official BLS measure overstate the true degree of unemployment?

Briefly describe the three major measures of the price level.

In April \(2016,\) the nominal interest rate on a one-year Treasury bill was 0.54 percent. From April 2016 to April \(2017,\) the consumer price index rose from 238.9 to \(244.2 .\) If you bought the one-year Treasury bill in April 2016, calculate the real interest rate you earned over the following 12 -month period. Given the results of your calculation, why were investors willing to buy Treasury bills in April \(2016 ?\)

What is the difference between the nominal interest rate and the real interest rate?
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