Update: Click here for the most recent jobs statistics.
As is customary on this site, on the first Friday of every month, I update the unemployment numbers so that I can compare the unemployment rate under President George W. Bush with the unemployment rate under President Obama at that time. The genesis of this ritual began when I felt compelled to respond to some left-leaning sites that were comparing Obama’s first two years and four months in office with Bush’s last and worst economic year (the above chart shows the most recent incarnation of this narrative).
In July, the private sector added 154,000 jobs in the seventeenth consecutive month of private sector job growth. Again, this is moderately positive news. At least the country had a net employment gain of 117,000 total jobs (private and public). That said, 117,000 falls short of the 125,000 jobs needed every month just to keep pace with the growth of the working-age population.
More good news is that the seasonally adjusted unemployment rate actually ticked down in July from a whopping 9.2% to a slightly less bad 9.1%. This number is 1.8 percentage points worse than President Bush’s last full month in office in December 2008. It also marks 30 consecutive months in which the unemployment rate has been 8% or higher in the 31st month of the Obama Presidency.
Furthermore, the unemployment rate only accounts for the percentage of the unemployed who are actively seeking employment. It does not include people who have given up on finding employment. In fact, the month actually ended with fewer people employed at the end of July than were employed at the end of June.
How is this possible?
Well, it turns out that the civilian labor force (the denominator of the unemployment rate) declined faster than the number of people who had jobs (the numerator). The civilian labor force ended June at 153.4 million vs. July’s 153.2 million. In contrast, 139.3 million people had jobs in June. The number of people with jobs declined by about 38,000 people from June to July, whereas about 193,000 people retired or simply stopped looking for work over the same period.
Both the Bush and Obama presidencies have been marked by a steady decline in the labor force participation rate. The labor force participation rate measures the number of people in the labor force as a percentage of the total working-age population. The labor force participation rate dropped 0.2% in July from 64.1% the previous month.
Therefore, the unemployment situation is even worse than it appears, because it does not account for people who have been forced to exit the labor market, because they can not find jobs.
Putting the Numbers into Perspective
President Bush’s overall record continues to look far better than President Obama’s to date. Over President Bush’s presidency, the private sector created a net 141,000 jobs. Surprisingly, this number includes the 3.78 million private sector jobs lost in 2008.
In contrast, under President Obama’s administration, the private sector has still lost a net 2.67 million private sector jobs. If I blame Bush and Clinton for the January 2009 and January 2001 numbers, respectively, the private sector would still have lost 1.83 million private sector jobs under the Obama administration.
Again, the point of this argument is not to assess blame on either administrations’ policy. It simply puts the numbers into perspective.
For every job that the private sector created under George W. Bush, the private sector eliminated ~19 jobs under Barack Obama. While the private sector job outlook has improved recently, the economy still must create 2.67 million private sector jobs to break even.
The country still has a long way to go to restoring full employment and the President is running out of time. According to The New York Times, no sitting President since Franklin Roosevelt has won re-election when unemployment was over 7.2% on election day.
And President Obama is no FDR.
Oh, I definitely agree. You can find a chart here http://www.shadowstats.com/imgs/sgs-emp.gif?hl=ad&t=1312554111 showing the U6 and alternate rates as compared to the official U3 numbers (U6 including short-term discouraged workers, SGS including short *and* long-term discouraged workers).
I mean, it’s definitely unfair that they’re comparing the Obama administration’s performance to Bush’s performance after the collapse of the housing bubble/start of the ’07 recession, but it’s also important to keep in mind that it *was* Bush-era policy that led to the most dangerous spike in inflation of the bubble, and further policy fumbles which allowed for the perpetuation of economic disaster (e.g bailouts, TARP). Obama’s just continuing the same interventionist course, which means that the economy will continue to crawl along, or will start to decline, which is pretty likely given the imminent threat of downgrade by S&P http://www.theatlantic.com/business/archive/2011/08/report-s-p-will-downgrade-the-us-but-why/243192/ plus uncertainty over the future of the US economy and the eurozone http://entrylvl.wordpress.com/2011/08/04/market-problems/ which, as a financial analyst, you’re probably keeping a keen eye on.
Thanks for stopping by and for posting these other measures of unemployment. Things appear pretty bleak right now as the economy seems like it is in a self-fulfilling death spiral. Companies have plenty of cash on their balance sheets, but they are afraid to expand or hire people because of so much regulatory uncertainty. The average person is worried about their job (or they don’t have one), so they reduce spending. Since consumers represent about 70% of GDP, demand declines. In return, companies continue to hire fewer people or lay more off, and the negative cycle continues.
This is really scary stuff…
Well, I don’t know that we’re necessarily in a death spiral–at least, not for the reasons presented, anyway. I mean, the main lesson that we should have learned from the last bust is that the conventional wisdom about boosting GDP/”aggregate demand” is really misguided. Consumer spending can swell if you expand really cheap credit to everyone, but that growth and economic activity are toxic and misrepresented as real advancement.
The second problem is that consumer expenditures are misrepresented in the GDP equation, because it also counts state payments for private services, like government health care subsidies http://www.businessweek.com/the_thread/economicsunbound/archives/2009/08/the_retail-impo.html as “consumer spending”. So, it’s not actually the case that 70% of GDP is based on (healthy) consumer spending. Some estimates place real (i.e. nongovernmental) consumption at around 50%, others estimate that it could be as low as around 30% when you account for aggregate spending (which is about 2.5x GDP). In any case, consumer spending isn’t the critical ingredient for economic health.
The model of recessions often used is basically: consumers panic –> consumers spend less –> businesses see less revenue –> less money for capital –> lower wages (or layoffs, as occurred in the Depression) –> less income for everyone –> consumers spend less —————> the entire economy goes to hell.
I take issue with this primarily because it recognizes consumption, but not production. We could ask why the government doesn’t just continuously stimulate to boost GDP. Typically, demand-side economists will say that, because the goal is full employment, stimulation beyond that point won’t boost activity in a meaningful way, because the extra demand will just result in price inflation. In other words, there’s a point where one has to admit that *production* is prior, not *consumption*. In a complete service economy where capital structure doesn’t matter (e.g. an economy of masseuses, stand-up comedians, prostitutes, and singers), then the conventional recession model might be useful, but, in a more complex economy, it doesn’t do us much good.
I don’t know that we necessarily disagree, but I think the model holding consumer spending as sacred has some really significant flaws.
“I don’t know that we necessarily disagree, but I think the model holding consumer spending as sacred has some really significant flaws.”
So the standard macroeconomic model is GDP = Private consumption + gross investment + government spending + (exports – imports). To grow GDP you must grow one or more of these items. By expanding money supply, you can help reduce the value of the dollar and make exports more positive than imports (because US products become cheaper overseas because of currency depreciation). We’ve done that (i.e., monetary stimulus). By increasing government spending one can increase the government part of the equation. We did that with the 2009 stimulus, which resulted in a short burst of economic activity, but was never sustainable. Bush tried it with his tax cuts, which probably helped prevent an even worse recession in 2001, but also contributed to an increase in the national debt.
So the fundamental conundrum is how do you get the economy going when you’ve already tried both monetary and fiscal stimulus? The left would argue for more stimulus. Businesses would argue for finding ways to stimulate more demand. Because of regulatory uncertainty, they are unwilling to make investment in the economy (the gross investment side of the equation). I would argue for more regulatory certainty and flatter, simpler taxes to stimulate investment activity, but not even I am sure if that would do the trick.
Great blog I really love your title and hope I see more rational Republicans on TV. When Obama gets 4 more years he is going to finish what he started. I believe the phrase “Yes we can” is beyond politics and is the attitude all Americans, Democrats and Republicans need to have right now. Yes we can become the highest educated country. Yes we can out innovate other countries. Yes we can…
Thanks, Jimmy for stopping by.
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Hi, I found you through a Goggle search.
You may call yourself ‘rational’ but you’re certainly not credible and I noticed that immediately. On your chart you credit Obama with January 2009. That’s bogus. That worst month of job losses during the George W. Bush Great Recession – 779,000- is all Bush. Which, unfortunately for your puff piece blows away your claim that Bush created 141,000 private sector jobs. He was negative by about 600,000. Contrast that with Bill Clinton 22 million new jobs created.
Sure, let’s elect another Texas republican governor.
You should correct your chart. Try a little integrity.
That’s patently false, and you know it. President Obama took office in mid-January 2009, and everyone knew since November that he was coming into office. Therefore, the employment data for January 2009 is open to debate, because the Bureau of Labor Statistics does not publish (to my knowledge) intra-month data, and both Presidents were in office at some point during that month.
Furthermore,you obviously did not read the entire piece carefully. Recognizing your point, well before you made it, I made the following statement in this piece:
So, even if I accept you subjective opinion, George W. Bush would have lost 653,000 jobs vs. 1.83 million jobs – i.e., the private sector would have shed jobs at 3 times the rate under Obama as under Bush. Our current President’s economic policy is still a disaster.
As for credibility, I did contrast George W. Bush’s data with that of Bill Clinton’s 22 million new jobs created, using the exact same methodology I did above here. To your point, Bush did not look so good compared with Clinton.
As for integrity, I don’t know where this comment comes from. Please find one article on this site that shows me advocating for “another Texas governor.” Just one.
Good luck with that.
By the way, the worst employment month of George W. Bush’s presidency was in November 2008 with a loss of 787,000 jobs (not 779,000 as you say). You might want to check your “facts” with “official” statistics at the Bureau of Labor Statistics.
The worst month of the recession was 841,000 jobs lost in January 2009, (not 779,000 as you seem to think). You’re off by about 62,000 jobs.
So much for credibility.
Thank you for posting both graphs that make it a bit more clear that as the Obama administration has been reversing the job loss rate, the unemployment rate that was obviously going up was having its rate slowed down significantly.
When jobs gets thrown off a cliff as happened in 2008, it takes some months for the next administration to catch the jobs freefall and bring jobs to a standstill.
[Note: Jobs turning positive doesn’t match the same month as when unemployment reached its peak because other factors play into unemployment numbers, such as people giving up on employment so not being counted as unemployed.]
It is unfortunate that as jobs was being taken back up, the 2010 end-of-year election results brought in a group into Congress that has been fighting jobs efforts by the government tooth and nail, bringing the recovery of jobs that was underway to a standstill (at our current 9% unemployment).
“It is unfortunate that as jobs was being taken back up, the 2010 end-of-year election results brought in a group into Congress that has been fighting jobs efforts by the government tooth and nail, bringing the recovery of jobs that was underway to a standstill (at our current 9% unemployment).”
That’s actually not accurate. The House passed 15 pieces of jobs-related legislation that are waiting for Senate approval. Job growth decelerated sharply in March – right after the President signed Obamacare legislation in much the same way that job growth accelerated after passage of the stimulus. In my view, the President should have remained focused on the economic recovery instead of wasting valuable political capital on the healthcare bill.
Thanks for the correction on deceleration events in 2010, although I disagree there was a sharp drop in march. The sharp drop in rate happened later (yes, delays are an issue, but so are other factors, including, eg, census jobs) and that immediately changed back to job growth (although anemic on average — in neutral — for many months afterward, essentially through the first quarter of 2011). A running average would naturally be much smoother.
Both sides are fighting the other sides preference mechanism for improving jobs (and we had the deficit battle), so it is true that these disagreements themselves are an important part of the reason for the more clear drop in rate that essentially happened in the second quarter of 2011.
“Thanks for the correction on deceleration events in 2010, although I disagree there was a sharp drop in march. The sharp drop in rate happened later (yes, delays are an issue, but so are other factors, including, eg, census jobs) and that immediately changed back to job growth (although anemic on average — in neutral — for many months afterward, essentially through the first quarter of 2011).”
I agree that there were certainly other factors at play as well, though the Census only impacted public sector jobs (and the unemployment rate), but not private sector hiring, which started to decelerate in March 2010. Here are some posts I did on the topic for whatever they are worth.
“Both sides are fighting the other sides preference mechanism for improving jobs (and we had the deficit battle), so it is true that these disagreements themselves are an important part of the reason for the more clear drop in rate that essentially happened in the second quarter of 2011.”
Actually there was a sharp decleration in job growth in March and then again in 2H11. I think we are both right on this one. I also agree that the in-fighting on both sides is certainly not helpful.
Umm looks like Unemployment started Sky rocketing in July 2008.
Yup, and its remained far higher than that ever since.
Thanks for your post. To me it shows one of two things, either:
1) We give waaay to much credit/blame to presidential policies for creating/destroying jobs.
2) Obama has down a way better job than he’s getting credit for. This graph shows that he had to respond to the mess while clearly the Bush/Dem Congress (see point #1) caused it.
All fair points. Thanks for stopping by Jeff.
Are you kidding, I can not even understand what Jeff said!!!!
This juggling of graphs is ridiculous. The factors of economic growth/decline and employment behave a lot like physical masses: they have momentum and don’t react instantly to changes. Policies produce results that start slowly, attain various levels gradually, and persist for a time after the policies are changed. During times of policy change, it is very difficult to assess whether observed effects are the result of old policies persisting, or new policies beginning to take effect. You have to make a deep and fundamental study to understand this — not just a bicolored plot.
It seems clear from the magnitude of the financial crisis which culminated around 2008 that this was not an ordinary business cycle. The bursting of the housing bubble was resonant with the unregulated growth of financial derivatives and banking speculation. Perhaps the only parallel in seriousness was the Great Depression. Even FDR’s policies did not cure that (though they made the lives of Americans much more tolerable, and protected us for more than half a century from a recurrence) — however, no one I think blames FDR for the Great Depression, or argues that Coolidge and Hoover’s policies of the Roaring 20s more than made up for the terrible decline after 1929.
You have fallen in love with simple pictures. There are lots of books now available detailing exactly how de-regulation, ratings fraud, and bank speculation led to the Great Recession of 2008. Pretty graphs and abstract numbers such as have been bandied about in this discussion don’t replace fundamentals.
(I am a retired mathematician who also knows some physics.)
I agree that the causes of the crisis are complex and include factors ranging from loose monetary policy, government programs pushing low income home ownership, exotic derivatives, the repeal of Glass Steagull in 1996, the housing bubble, and good old fashioned consumer greed. Blaming it on one President or person is too simplistic. As I noted in my post, these charts are simply a response to similar charts that the left has used to tell a narrative that President Obama’s policies single-handedly saved the country. President Bush’s TARP and $150B-ish stimulus, and Obama’s $787 billion stimulus certainly helped stop the bleeding. Where President Obama failed was when he wasted valuable political capital to pass another massive federal entitlement program via Obamacare, when he should have been laser-focused on driving economic growth. There are still plenty of things he could be doing to juice economic growth, but is not. Hence he should have some culpability, though clearly not all blame, for an unyielding unemployment rate of 8.5%, which was higher than when he entered office in 2009. That’s all.
aww yes the same old argument: The attempt to make yourself seem balanced by saying that Obama and Bush’s record is a wash. What this does is help the president with the worst job creation record in 50 years(GWB) seem as if he wasnt that bad and all of you know that he was one of the worst presidents in history. Not only in foriegn policy but fiscal policy. Obama is a fiscal conservative compared to Bush, but we all know Fiscal Conservative is a farce to begin with…good day
“aww yes the same old argument: The attempt to make yourself seem balanced by saying that Obama and Bush’s record is a wash. ”
Well if you look at things like numbers and statistics, that’s exactly what they say. Obama has a slight advantage, but roughly half a million net private sector jobs were lost during each administration.
“all of you know that he was one of the worst presidents in history.”
Really? How so?
“Not only in foreign policy but fiscal policy. Obama is a fiscal conservative compared to Bush, but we all know Fiscal Conservative is a farce to begin with…good day”
Have you bothered to look at the rate of spending under President Obama? Take a look at the rate at which President Obama added to the national debt. He criticized President Bush for running up $4 trillion at the time of the election, while Obama blithely added another ~$5 trillion in his first three years in office. Again, check your math. It’s wrong.
And then there is foreign policy. What you are saying is that President Bush’s record is worse than President Carter’s and Johnson”s. Really? The number of deaths lost in the Vietnam War was about 10 times that lost in Iraq and Afghanistan combined. Again, check your facts and your math. Both are sorely lacking.
I think it’s cute someone would actually try and compare Obama’s UE #s vs Bush’s, as if they’re operating in the same environment. Basically, for lack of a better analogy, Bush walked into the ring fresh, Round 1, and then got 9/11 dropped on his head. Then he had time to recover, etc, but did little recovering. Then the crisis began, and lingered into Obama’s presidency. Obama started a fight around 7 rounds in.
Tough to compare the better fighter.
Lame comparisons made all the time, especially when you’re trying to say “look at the date…” Really lame stuff.
I’m glad you think it’s “cute” because I only started writing these posts in response to left-leaning bloggers who were making the exact same comparison, only with less data – data that conveniently fit their narrative. You also forgot to mention the tech bubble that popped and Hurricane Katrina, of course.
Perhaps you have a better explanation on why we have a higher unemployment rate today than when Obama took office, and why he deserves to be re-elected? Blaming Bush six or twelve months into his administration is one thing, but you start to stretch the imagination after three years.
Before you rush onto this site leading with an ad hominem attack, please think through your arguments first.
Three years — not at all. What makes you believe that an economic dislocation of the size of the 2008 disaster can be reversed in three years? The Republicans in both houses of Congress fought tooth and nail over every one of Obama’s proposals — including, of course, a healthcare plan that was stolen from the Heritage Foundation and that was pretty much to the right of Nixon’s. It would be one thing if Obama was allowed to implement the plans of his advisers, but he wasn’t. If my memory serves me correctly, Ronald Reagan was given pretty much what he wanted after his first election — the Dems rolled over.
Of course, Obama bears some blame. His business-as-usual economic advisers had long been pretty cozy with Wall Street. He was influenced by the wrong Robert (Rubin): he should have tapped Robert Reich and Bob Kuttner if he really wanted to make a meaningful change in the cast of characters — not that the Republicans in the Senate would have allowed him to appoint these people…
You do realize that Obama only had to deal with a House Republican majority for just over a year right? The President had solid majorities in both houses of Congress for two years. I don’t really think you can blame the unemployment rate on Republican obstruction. They haven’t been in office long enough.
I also don’t expect a complete turnaround. However it would be nice to be at a lower unemployment rate than where the country was when Obama first took office. It’s been over three years with a solid Democratic majority in Congress for two of those years and the country is still at 8.3%. It’s about time we stopped blaming the last guy for everything.
I don’t understand. As I pointed out in a previous post, the economy is very much like a mass: it reacts to surrounding forces with inertia. In other words, like a speeding car, accelerating (or applying the brakes) takes time to produce a change in velocity. Obama was able to pass some legislation during the two years when he had congressional majorities. This is the force acting on the economy. However, when the force was first applied (legislation passed) the economy was speeding downward and unemployment upward — this is shown in all plots I’ve seen. Then there was an inflection: employment and business actvity leveled off from their disastrous declines following the Bush years, and now show definite improvement. The 8.3% unemployment is much better than the peak of well over 9% that was the worst. I’m afraid your impatience is a bit naive given the mathematics involved in dealing with economics.
(This will be continued in a further post below, since space seems to be limited.)
Just to continue a bit. While Obama took office with Democratic control of both houses, that is not as simple as it seems. If you recall, Mitch McConnell announced that the Republicans major policy would be to insure that Obama was a one-term president. That entailed using the threat of filibuster to make action in the Senate require a 60% majority — hardly the intent of the Founding Fathers. Several Republican-siding Democrats (Landrieu and Nelson e.g.) made obtaining this majority very difficult for Obama, as did his very timid approach to governance.
Recall the history of ObamaCare: the House and Senate passed versions (before Scott Brown); they could not be reconciled; then Brown’s election forced the House Democrats to agree with the Senate version which could no longer be changed because of filibuster.
I don’t know. Obama succeeded in passing legislation costing nearly $2 trillion in less than 15 months. Based on this statistic, the claim that Republicans were able to obstruct the President from implementing his policies rings a bit hollow here.
Well that is a matter of opinion, not mathematics. The situation has certainly improved in private job growth, but to say that over three years is too soon for the unemployment rate just to get back to where it started stretches the imagination a bit.
First of all let me say President of the United States is one job I would gladly turn down even in this rough economy. I don’t know whos fault it is for the state we are currently in however my hope is that people will stop playing the blame game, grow up and do there best to fix it. Yes it’s a slow road and it’s not going to happen over night but whoever the next president is weather it be Obama or someone else I pray we see a positive change in this great country of ours and see this as a learning experience.
Well said, Kimberly.
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I think I pointed this out before but the claim “no President has won re-election with unemployment over 7.2% since FDR” is completely meaningless. The “N” is only three – Ford, Carter, and Bush the Elder. In each case there are a host of other factors that come in to play, not the least of which is the strength of the opponent, in each case an “inspiring outsider.” Santorum might be able to play that role, Romney can’t. Ford was unelected and lacked charisma, Carter was dogged by a series of foreign policy scandals — and the recession was getting worse, not better when the election came. But when the N is 3 and the system so complex, such a factoid sounds more persuasive than it is.
That’s a fair point. That said, 8.3% unemployment isn’t exactly a great selling point.
If Santorum is “inspiring” I would hate to be around when his inspiration becomes reality. Given that nearly 100% of the people in this country think that sex is not just for procreation, and an equally large majority does not want a theocracy, what sort of inspiration are we talking about?
I don’t believe any rational personal — Republican or not — could or should look forward to Santorum being an “inspirational” candidate and beating Obama. Would you seriously consider voting for him over Obama?
I would vote for Obama over Santorum or Romney. (One Republican that would get my vote over Obama would be Olympia Snowe, but that’s not going to happen!) I would be comfortable with a President Romney; I would not be comfortable with a President Santorum. My point is not about his qualities for being President, but his ability to be an effective candidate. Santorum’s unlikely rise underscores Romney’s problems and to me indicates that the GOP needs to be worried. If Romney can find a message that is positive and inspiring, he’ll be a strong candidate. If not, he’s more like a GOP Mondale. If he goes to the convention without 1144 delegates, the GOP might need to consider drafting someone else.
Fair enough Scott.
I spend a lot of time in Central Maine and to me Olympia Snowe is a bit of a disappointment. I couldn’t understand why she was so independent up to a point, but eventually, more often than not, did what Mitch McConnell told her to do. She’s a whole lot smarter than he is and a whole lot more tuned in to what ordinary people — especially her constituents in Maine — want and need from their government. She was very popular throughout the state.
“ObamaCare” would have been very good for Mainers, whose healthcare options have not been very good at all (except for the wealthy coastal folks). A lot of my friends in Central Maine don’t get regular checkups, and try to buy their medicines from Canada (many have relatives there).
Your critique of Olympia is shared by many people I know! I think she did cave to a lot of pressure and could have been more influential in trying to force better compromises on issues that the GOP simply refused to consider. Her voting record did get more conservative after 2008. I think she was trying to balance lots of different pressures and realized it just wasn’t worth it.
For clarification: I exaggerated when I said that “an equally large majority [nearly 100%] does not want a theocracy.” A large majority of Americans does not want a theocracy but, unfortunately, that is not close to 100%. There are a lot of fundamentalists (like Santorum) who would like to see the country run by Ayatollahs of the Christian persuasion. Of course they wouldn’t call them Ayatollahs, but that’s what it would amount to. Remember that Kennedy’s refusal to let his Catholic faith supersede his work for the interests of all Americans made Santorum want to vomit.
Still think that you would vote for Santorum over Obama?
Are you talking to me or to Scott?
It probably doesn’t matter, I think I can answer for both of us.
I’m 95% confident that Scott would vote for Obama in the scenario you outlined.
Scott, please correct me if you disagree.
Given those two choices, I probably wouldn’t vote.
The KGB,and MI5 found this chart to be correct
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