If you project what would have happened under the old system, you can always make a new system look like the right answer

Greg Mankiw:

...the fiscal stimulus act passed last year, gave the Council of Economic Advisers an impossible job: measuring how many jobs the act created. Here is the CEA's latest attempt. As far as I can tell, there are two kinds of evidence here.

First, there are model simulations. That is, the CEA took a conventional Keynesian-style macroeconomic model and used those set of equations to estimate the effect the stimulus should have had. Essentially, the model offers an estimate of the policy's effect, conditional on the model being a correct description of the world. But notice that this exercise is not really a measurement based on what actually occurred. Rather, the exercise is premised on the belief that the model is true, so no matter how bad the economy got, the inference is that it would have been even worse without the stimulus. Why? Because that is what the model says. The validity of the model itself is never questioned.

My take, my language: The light blue areas to the right of the vertical line are estimates of how many jobs would have existed in the absence of stimlulus. The dark blue areas above the light blue areas reflect the number of jobs actually added. Because the validity of the model is not questioned, the Council of Economic Advisors has wide latitude in attributing new jobs to the stimulus.

March surprise: All new jobs went to natives

Boosted by the hiring of Census takers and a rebound from February’s snows, the economy created 162,000 jobs in March—the largest monthly increase in nonfarm payrolls in three years. The unemployment rate held steady at 9.7% with the labor force rising by 398,000.

The “other” employment survey—of households rather than businesses—revealed a March job gain of 264,000—the third consecutive month of robust employment growth. The Household Survey is regarded as a leading indicator of future employment trends because it captures small business hiring, home based entrepreneurs, and—more importantly, from our perspective—illegal aliens.

March 2010 was one of those rare periods in which all new jobs apparently went to natives. Here are the month’s employment changes:

Total employment: +264,000 (+0.19 percent)

Hispanic employment: no change (+0.00 percent)

Non-Hispanic employment: +264,000 (+0.22 percent)

Accordingly, the VDARE.com American Worker Displacement Index (VDAWDI) fell by 0.3 percent March to 125.6: