Update: Click here for the most recent jobs statistics.
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 October, the private sector added a robust 104,000 jobs in the twentieth consecutive month of private sector job growth. This development is very positive news. The country also had a net employment gain of 80,000 total jobs (private and public). That said, 80,000 still falls short of the 125,000 jobs needed each month just to keep pace with the growth of the working-age population.
The seasonally adjusted unemployment rate declined slightly from 9.1% to 9.0%. This number remains 1.7 percentage points worse than President Bush’s last full month in office in December 2008. It also marks 33 consecutive months in which the unemployment rate has been 8% or higher in the 34th 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. The good news is that the month ended with more people employed at the end of October than were employed at the end of September, and that the civilian labor force increased slower than the number of new net employees.
The civilian labor force ended September at 154.0 million vs. October’s 154.2 million. 140.3 million people had jobs in October, which was an increase of about 277,000 people from September versus about 181,000 people entered the labor force.
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 remained unchanged in October from 64.2% in the previous month.
That said, since the civilian labor force is the denominator in the unemployment rate, its slightly smaller increase relative to the increase in the total number of employed Americans is an important reason why the unemployment rate only ticked down by a tenth of a percentage point to 9.0%.
Putting the Numbers into Perspective
The employment statistics during President Bush’s period in office continue to look better than those under President Obama’s to date. Over President Bush’s tenure, the private sector lost a net 653,000 jobs, assuming that he gets credit for all jobs lost in January 2009 and none for those lost in January 2001. I changed my methodology in response to a left-leaning blogger‘s fair point “that CES estimates represent information reported by survey respondents for their pay periods that include the 12th of the month.” Hence, any subsequent numbers for jobs created near the end of January would likely appear in the February numbers.
If one attributes the first 19 days of January 2009’s job losses to Bush, and the remaining 11 days of job losses to Obama, the private sector shed 346,000 jobs during the Bush administration (the private sector gained a net 141,000 jobs if one attributes all of January 2009’s job numbers to Obama, and all of January 2001’s numbers to Bush). Surprisingly, this number includes the 3.78 million private sector jobs lost in 2008, and an additional 841,000 in 2009 (515,000 if one attributes the first 19 days of January 2009’s job losses to Bush).
In contrast, under President Obama’s administration, the private sector has still lost a net 1.44 million private sector jobs (1.77 million if one attributes the remaining 11 days of job losses in January 2009 to Obama, and 2.29 million if one attributes all of January 2009’s losses to him).
Again, the point of this argument is not to assess blame on either administrations’ policy. It simply puts the numbers into perspective.
For each job the private sector cut under George W. Bush, the private sector eliminated ~2 jobs under Barack Obama (if one attributes January 2009’s job losses to Obama, the private sector eliminated ~16 jobs for every job it created under Bush). While the private sector job outlook has improved recently, the economy still must create 1.44 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.
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Interesting how previous months were revised slightly higher. I still think it is a bit misleading to talk about jobs created under Obama or under Bush (or under Clinton). It sounds like they are somehow responsible. The economy runs in cycles that a President has little control over. To be sure, Presidents get punished if their timing is bad and they happen to govern during a poor cycle. President Obama will benefit if job growth returns next year (the public has short economic memories). Yet he has little power over whether it does or does not.
I actually tried to tone down the language even more to reflect the reality that presidents are sometimes victims of circumstance. That said, I think the stimulus helped drive the short-lived surge in job growth in 2009, and the passage of the healthcare bill helped decelerate job growth in March 2010.
I’m having a hard time drawing any causal link between the health care bill, which has had a very limited impact so far, and jobs. I think we’re simply in a deleveraging cycle that’s going to take awhile. I do think health care needs to be revisited; I don’t like having the US the only advanced industrialized country where health costs cause bankruptcies and 50 million aren’t covered. But the reform passed has real flaws.
Proving causation is difficult for anything, but I think there is definitely a correlation. The healthcare bill is a prime example of what Republicans refer to as regulatory uncertainty. If you don’t know how much labor will cost, you are more hesitant to hire. Of course, lackluster demand is the key driver, but I do think that the healthcare bill certainly had a negative impact because it is likely to raise costs for employers.
I agree with Mr. Erb that Presidents have limited effect as I have written elsewhere, https://sites.google.com/site/orthovoxwritings/home/columns-2011/110909-false-faults .And I agree with Mr. Hazlett that Presidential policies and Congressional laws do have effects, some temporary and some permanent, but mostly small. Unfortunately, or perhaps fortunately, any decision for action is based on incomplete data (else it would be hindsight). Finally, the economy does not “create” jobs any more than the biosphere “creates” life. Both the economy and the biosphere are composed of uncountable events which are not easily manipulated.
I completely agree about having insufficient / incomplete data. But as Patton would say, an 80% solution today is better than a 100% solution a week from now.
BTW, I applaud the longer look. At my age, longer looks are my specialty. They add needed context. For example, Plato thought the next generation was a coming disaster, a complaint we older folks have been making for 2500 years.
The longer look always seems to be a scary one. However, if you want a more optimistic really long look for humanity, check out this site. OK, I just reviewed it again. It’s not so optimistic:
John Mauldin’s free Outside the Box free newsletter of October 17, http://www.johnmauldin.com/outsidethebox/hoisington-quarterly-review-and-outlook, reprinting a piece from Hoisington Investment Management Company, which includes a chart (#5) recording the history of full time employment from 1968 to 2010 from BLS data. Employment during Mr. Bush’s presidency continued the long term trend from 1968 until 2008 when the housing bubble burst. Will the long term data trend continue during Mr. Obama’s presidency?
“Will the long term data trend continue during Mr. Obama’s presidency?”
I hope so, but it doesn’t look like it so far.
I definitively think the Obama administration is smart enough to manipulate unemployment numbers if he needed to. But he doesn’t have to look at what he is up against. I really want to vote republican b/c of the economy but as a liberal person who lives in West Hollywood I have no choice but to vote for Obama again. Look if the R-party candidates had their way men like me and my friends would go to jail or be executed for being either bi-sexual or gay and having long hair and smoking legal marijuana.
I also want to give props to Sean for writing an unbiased blog and compromising with the left with the numbers. That really shows your integrity!
Also, isn’t there something to be said for the fact that the cost of computing power (“law of accelerating returns by Ray Kurzweil”) is getting twice as inexpensive but twice as powerful. Isn’t that a receipt for high unemployment no matter who is in office.
“Look if the R-party candidates had their way men like me and my friends would go to jail or be executed for being either bi-sexual or gay and having long hair and smoking legal marijuana.”
That’s what is unfortunate about many members of the Republican party. They champion government being out of people’s business, but then try to legislate morality.
“I also want to give props to Sean for writing an unbiased blog and compromising with the left with the numbers. That really shows your integrity!”
Thanks, Jimmy. Data integrity is more important to me than winning an argument. If new data comes to light that changes how I interprete something, I try to revisit my views.
“Also, isn’t there something to be said for the fact that the cost of computing power (“law of accelerating returns by Ray Kurzweil”) is getting twice as inexpensive but twice as powerful. Isn’t that a receipt for high unemployment no matter who is in office. Isn’t that a receipt for high unemployment no matter who is in office.”
Absolutely. Sometimes I think that capitalism has been so successful that it has reduced the need for hiring people. It is an interesting dilemma for modern society.
“I think that capitalism has been so successful that it has reduced the need for hiring people.”
Did you read the article in “The Economist” today on AI?
No, I didn’t. Thanks for sharing. This issue is one that seriously worries me.
You wouldn’t be one of the guys I’m worried about. You seem to lack the narcissism, perpetual victimhood, and entitlement issues that for others make “failure” the end of something. Do you even own a tent or drums? 😉
In all seriousness, I could see your field like mine being affected by AI in a big way, but to me it’s less about how things change and more about how we respond to change.
Me, I just thought of something new (capitalism breeds innovation, after all!) as I typed this, in case things get really bad and I have to start over. I’m going to invent a new product called the “Decapitalism-er”, It’s a highly reflective piece of silver that SPATs can use to shine light into the windows of the Wall Street fat cats looking down upon them, which will blind them. This way, they can’t continue the evil work they’re doing. It can be used as a new form of currency amongst the SPATs and it’s also symbolic – “fat cats” hate any sort of light being shined upon them.
I’ll wave this shiny object in front of the SPATs, they’ll get distracted and “ooh and awe” at it’s shinyness, and then once I have them hooked I’ll sell it to them for $5 a piece (my cost would only be $0.05 a piece, but gives the protestors a new weapon and capitalism’s OK when it benefits the cause, right?)
Who knows – maybe if I put “Free” in front of it I can lead them out of Zucotti like the Pied Piper and charge the city a nice big chunk of change for trash removal? Hahahahaha!
where can i find a link for any of the numbers?
You can find the numbers from this page.
You have to select multi-screen data search and then select the appropriate options for montly employment from “Employment, Hours, and Earnings – National.”
Since the site only provides you with total private employment numbers for a given month, you would have to calculate the change from month-to-month.
I hope that helps.
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Sean, I appreciate your attempt to be fair, but Ithink you really have to assign at least a minimum ofr legacy effects. Bush started with the legacy of the Clinton Presidency and a Republican Congress that generated a budget surplus, leading inevitably to a recession. He had no warning, so must be given some time to realize there was a problem, and some more to react, assisted by a supportive Congress. The 4th month in to his presidency was a pretty unmistakable red flag. Let’s assume that with a sense of urgency he could have got something under way in another 3 months. (Actually it was really only the Fed that took action). OK subtract his first 7 months of job losses and give them to Clinton.
Similarly, Bush /Republican policies enabled and encouraged the housing bubble, which unlucky for him popped on Bush’s watch. He left Obama a legacy of huge negative momentum. Obama knew immediately that he had a problem, took urgent action and got the stimulus passed by a supportive Congress. The absolute earliest his initiative could have any impact was April 2009. OK give his first 3 months of job losses to Bush.
I think you will find that Bush gets credit for 2M jobs lost and Obama for 0.8M jobs gained.
Also note the slope of Bush’s unemployment improvement from May 2003. Obama has achieved the same slope so far.
I think you just have to try a little harder.
I am happy to leave the record set as it is, without assigning blame on either party. The charts only measure whether jobs were gained or lost while a particular President occupied the White House. It is as objective a definition as one can get. Rearranging the time line to make one president appear more favorable than another necessarily injects far too much subjectivity. One could make an equally ridiculous argument on the right that the job loss numbers for Obama need to start in November 2008, because businesses reacted to the news by sharply reducing their hiring in reaction to the election of an anti-business president.
I’d rather stick to a strict definition and let both sides debate who is responsible and for what time periods their blame starts.
Regarding “If one attributes the first 19 days of January 2009′s job losses to Bush, and the remaining 11 days of job losses to Obama. . . .” Isn’t this rather a splitting of hairs. Shouldn’t we look at these statistics over federal budget years. Obama taking credit for everything after jan 19th is just as specious as Bush not being responsible for anything after. The federal budget had been adopted months before obama took office and anything extra from that point onward he could claim (the Stimulus, etc.) but the general behavior of the federal government was set in the budget already.
I do appreciate the attention to detail, but assigning responsibility is very difficult in any case.
“I do appreciate the attention to detail, but assigning responsibility is very difficult in any case.”
Indeed. That’s why I go with the policy of linking January to the last president as it most closely accounts for when he was in office. Many on the left have argued that using the federal budget years would be more accurate, yet the FY2009 budget formulation didn’t include the stimulus, which President Obama signed. Those on the right might argue that Obama should get credit for everything beyond November 2008 since businesses responded to his election by cutting back hiring — admittedly a ridiculous argument, but similar to the argument for using federal budget years because it would make one’s partisan statistics look better for one’s side.
Anyway, the purpose is to just lay out the statistics in the most intuitive manner and let both sides decide who deserves credit or blame and why.
Anyway, thanks for stopping by, Stephen.