The Economy? Words Fail Me.

By Dana Milbank
Friday, July 4, 2008; A03

Think you’re worried about the economy? Phillip Swagel is a wreck.

The assistant Treasury secretary for economic policy, Swagel came out for his monthly economic briefing yesterday, 90 minutes after the Labor Department reported that the country had shed jobs in June for the sixth straight month.

Does this mean the economy is worse than the Bush administration expected?

“We shouldn’t, in a sense, be surprised when the data are, are, soft,” Swagel managed to say.

Does the economy need another stimulus package?

“I-it seems, you know, it seems like that’s, that’s enough, uh, enough.”

What might trigger another round of economic stimulus?

“I don’t, I guess I don’t have an answer, I mean, you know, beyond saying we look at all the data and, um — so, my usual line.”

Okay, so it wasn’t a strong performance. But let’s cut Swagel some slack. He’s a sharp economist (his PhD is from Harvard) and, in ordinary conversation, he suffers none of the speech difficulties that plagued him on the stage yesterday. His various roles in government, at the Council of Economic Advisers, the Federal Reserve and the International Monetary Fund, were too junior for him to deserve any blame for the current economic troubles.

But Treasury Secretary Hank Paulson, who was in London yesterday, and Swagel’s other superiors in the Bush administration left him with an impossible task: appearing on camera to put a favorable and reassuring gloss on an economy that has gone to the dogs.

Yesterday’s report that 62,000 jobs were lost brought the total for the first half of the year to 438,000 jobs. Meanwhile, the Institute for Supply Management reported that its measure of the service sector had declined in June. Stock markets, flirting with a bear market, finished another losing week. Oil pushed to a record high. Inflation and foreclosures are up, consumer confidence is down, and administration forecasts for a “strong pace of growth” in the second half of 2008 are look increasingly absurd.

It was a hopeless spin assignment — but Swagel, the administration’s sacrificial lamb for the day, had to try. And so Swagel, bookish and bespectacled, entered the Treasury Department‘s briefing room with evident trepidation. He nodded and offered smiles every which way. His heavy breathing, picked up by the microphone, could be heard in the back of the room.

“Um, I’ll start off as usual with a short statement and then, uh, take questions,” he began.

In his statement, he employed the great euphemisms of his profession: the economic “headwinds,” the housing “correction,” the credit-market “disruption.” But, he offered, “the stimulus package will help support . . . spending.”

A questioner asked about private forecasts, which, in contrast to administration forecasts, see a contracting economy through early next year. “You know, it doesn’t look like it to us now, but obviously we’ll have to see where we are at the end of the year,” he answered.

Might a second stimulus package be necessary? “Right now, the way we see it is the rebates that are already going out are big enough, and were timely enough, to make a difference and-and to support spending,” he said.

Swagel was asked whether the energy shock and a longer-than-expected housing slump justify more federal action. He admitted that rising gas prices have pretty much offset the tax rebate checks, but this only proves, he said, that “the stimulus payments were timely and needed.”

Asked if he could reassure those who worry it’s time to hide valuables under the mattress and get a shotgun, he chuckled and then ventured: “You know it’s i-in a sense what — I think what matters is it’s worse than, it’s worse than, it should be.”

For a brief, joyous moment for the economist, it appeared he had exhausted all the questions, but as soon as Swagel got out “I hope everyone has a good holiday,” another hand went up.

The reporter asked if he saw any hope for economic revival in the new employment report. Swagel exhaled loudly. “No,” he said, then sniffed and exhaled again. “You know, the data today, right, we had, wage gains were decent, but of course we know that overall inflation, uh, is going to fully offset and more those, uh, you know, those wage gains,” he said. The unemployment rate remained at 5.5 percent, but “I don’t . . . take any comfort from that.”

Though still forecasting “modest but positive growth,” he cautioned that “you’re going to still see a weak labor market, so, um, yeah, so it’s not, I don’t expect to come out next month and, uh, you know, and have great news on the labor market, either.”

And with that, the Treasury official departed the room for what one hopes will be some much-needed calm.

For a video version of this column, go to

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