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 November, the private sector added a robust 140,000 jobs in the twenty-first consecutive month of private sector job growth. This development is very positive news. The country also had a net employment gain of 120,000 total jobs (private and public). That said, 120,000 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 from 9.0% to 8.6% — the third lowest month of unemployment during the Obama presidency. This number remains 1.3 percentage points worse than President Bush’s last full month in office in December 2008. It also marks 34 consecutive months in which the unemployment rate has been 8% or higher in the 35th 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. While the month ended with more people employed at the end of November than were employed at the end of October, the civilian labor force declined faster than the increase in the number of new employees. Therefore, the main reason unemployment declined is that the denominator (the civilian labor force) decreased more than the numerator (the number of employed Americans) in the unemployment equation.
The civilian labor force ended November at 153.9 million vs. October’s 154.2 million. 140.6 million people had jobs in November, which was an increase of about 278,000 people from October versus about 315,000 people who left 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 decreased in November to 64.0% from 64.2% in the previous month.
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 1.26 million private sector jobs (1.59 million if one attributes the remaining 11 days of job losses in January 2009 to Obama, and 2.10 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 ~15 jobs for every job it created under Bush). While the private sector job outlook has improved recently, the economy still must create 1.26 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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Some things to bear in mind when looking at unemployment data:
1) A single month does not a trend make. Things can swing up/down for many extraneous reasons, i.e. the Verizon strike in August that temporarily added 45,000 people to the unemployed list. IT’s much more important to look at rolling averages;’
2) people who stop looking for work are not necessarily the hidden unemployed. Some are retiring. Some go back to school, Others are people who voluntarily jump in & out of the workforce (think “ski bums” and part-time students). Others accept work that pays them under the table. It’s not good that the number of “non-participants” increased, but it’s not necessarily what it may seem;
3) certain sectors of our economy have been hit particularly hard during the past 3-4 years, and these are cyclical and not the result of specific economic policies of government. The most obvious is the construction and housing sector, which has totally crashed along with the collapse of the housing market. Another is the financial sector, which has shed jobs like a cat in summer. One sector that probably has lost many hundreds of thousands of jobs as a result of specific (anti)government policy is government;
4) don’t forget that structural unemployment has been increasing for the past decade or more, and has only accelerated during the latest recession. This is not something that can be easily fixed if at all.
It’s easy to say “I’m just comparing the numbers”, but that’s like saying that Mark McGwire and Barry Bonds should be compared with Hank Aaron and Babe Ruth.
All fair points. However, you have to admit that while the headlines look good, the details really take the wind out of the sails of this month’s unemployment numbers.
Your insights almost bring uncontrollable laughter… and fearing that I might wake up my family… I move on. From the looks of your picture, you look as if you might be what my dad use to refer to as ‘wet behind the ears’… not enough years or experience to make an educated opinion.
Case and point:
Many of my friends and I have our own companies and try our best to live by the current tax system, changing daily as it is. Yet, as a business owner, I can also promise you that the system is written for us, not the employee… point blank.
A few years back, the tax code was changed so that I could write off a piece of equipment all at once instead of having to depreciate it over the allotted time. Wonderful!!! Now, if my year is going to well, I simply write off piece of equipment for it’s full value. Still needing the ‘write off’, I then sell the equipment for a ‘small price’ and then lease the equipment back to myself… again becoming a 100% write off… and all perfectly legal. My numbers look wonderful!!
On the smaller side of things; what is a car payment, fuel, insurance, and dinning out?? Where as a typical employee who gets a paycheck must alot his money to achieve all his goals, I am somewhat exempt from this same game.
Before I get my money, before, all my vehicle expenses are paid for… and much of my own personal entertainment. Gasoline is simply a number on a statement, and a car payment is simply another expense the company must absorb… again making it as if my company does not make money.
There is money there… it’s just all legally written off. Wonderful!!
I genuinely doubt you truly understand the current tax system. I have story after story that I could relay, but by the end I would have carpal tunnel syndrome. One of my favorite though is a good friend of mine who is probably one of the smartest people I know. Even better, he doesn’t have a college degree.
This individual owns well over a million dollars in property. Chump change to some, but in my book, quite the accomplishment!! Having recently built his family a brand new 4k sq ft house, some how, he and his wife live on a combined salary of 3k a month. I laugh everytime I hear it!!! It’s all 100% legal, but somehow, he lives on 3k a month!! NOT!! Again, when one of his properties nears it ‘depreciative end’… he simply does a ‘property exchange’ so as not to lose his write off. HMMMM? A simple piece of paper and the write off continues.
In closing, the ‘codes’ are written for me.. not the employee… and yes, to an unfair advantage. I doubt that you truly understand how the system works. Further, it is not something that is shouted from the roof tops as it surely would start a riot. Whereby, i you are a W2 employee… have fun with your check…after paying your taxes. Please continue to fight for me, the one,whom before I pay one penny of taxes, damn near all my bills are paid by my compay. Thereby, my ‘check’… is spendig money…legally.
So let me get this straight. Your first argument is that I must not know what I am talking about because I do not have enough experience. You came to your conclusion that I do not have enough experience, because I look young in my picture. Yet, you know neither how old I am nor what my experiences are. In essence, your leading argument is pure ad hominem, and it is poorly reasoned ad hominem if that is even possible.
Then you support your contention by elaborating on how I don’t understand the tax code, when neither this post nor any of its associated comments reference the tax code. The bottom line is your argument is coming from left field here, so I’m not sure how to address your argument other than to say that, yes, I am fully aware of how accelerated depreciation works, but I fail to see the point you are making in regard to a post that makes no mention of the tax code.
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Where I find your attributions of the job losses to President Obama specious – as is your attribution of job losses due to President Bush – is in the early part of the entire cycle. If you look at the graph of unemployment during the Great Depression, unemployment didn’t peak until well into 1933, so under your argument, you would be attributing those same job losses on FDR. Instead it’s a continuation of an existing trend which the incoming President’s policies have had no chance to effect. The downward inertia, as well as inherent lag due to legislative processes are going to factor in.
I might also point out that during Bush’s years, there was no corresponding major cut in local and federal government employment, so there’s some differences in job factors there.
I am not blaming the job losses to any one policy, economic situation, or President. I am merely ascribing job loss statistics to the time period in which each President was in office and based on how those statistics are reported. My ultimate goal is to generate a discussion as to why numbers are the way they are. On the one hand, liberals tend to see the massive loss of private sector jobs during the Bush administration and the reversal of this loss after Obama took over, as a sign of the success of President Obama’s policies. On the other hand, conservatives point to the unemployment rate nearly three years ago and compare it today’s (7.8% vs. 8.6%), and blame Obama’s policies for no improvement in three years. The reality is that both Presidents deserve some blame, as does the American consumer for running up so much debt. The bankers deserve some blame for creating complex financial instruments that fueled the American consumer’s greed. Congress also deserves blame for having quotas for home ownership for folks who could probably never afford to own a home. The wars of the last decade were a consequence of 9/11, among other things. Lastly, debt-fueled economic crashes tend to take 5-7 years to work themselves out, and so on.
The bottom line is that the unemployment rate is influenced by many factors, only one of which is policy. I personally think the stimulus helped in the shor-term, but only made our country’s long-term structural problems worse. Obamacare was also ill-timed and is the result of a government that is expanding too much. On the other hand, I believe there is a role for government, but one that is at 19% or less of the country’s GDP.
There’s many ways to interpret or spin the numbers but more importantly, writers should attempt to put the context of underlying fundamentals that affected disposable income (the economy) via both policy and world events.
As Bush entered office, The United States of America was invaded and attacked by foreign interest. Any such attack on American soil deserves a rational and equal response for the country could lose its standing in world circles without one.
As it was, Bush weathered the otherwise economic devastation of an American Invasion as well as the Internet Bust. Remember, the Internet Boom (an unprecedented a 3.5% unemployment rate) was created by the exuberance of Venture Capital and other Professional Investors. The leveling of unemployment in 2001 were people who normally did not work returning to a more leisure lifestyle.
As employment soared and unemployment dropped below 5%, employers paid more (higher pay and sign-up bonuses) to hire employees so disposable income was at an all time high at the turn of the century. But the unavoidable war (remember, an attack on American deserves a rational and equal response) resulted in a spike oil prices.
As gas prices rose to $4-$5 dollars per gallon in the U.S., it hit the disposable income of every American regardless of social standing. If you owned a car, you reduced monthly spending at least equal to or greater than your monthly gas expense prior to 2002.
In the later part of President Bush’s term, Congress ruled new laws persuading banks to lower lending standards so more Americans could enjoy wealth building opportunities of home ownership. An admirable concept but those preexisting standards secured the nation’s wealth and authors of the law failed to consider the risk to all American homeowners – especially those in or near retirement age.
Lenders, loan brokers and even real estate agents counted on continued U.S. Economic growth and “bet” barrowers would get a significant pay raise in very short periods of time. These bets are called “Adjustable Rate Mortgages” which ratchet up house payments in predetermined periods of time
These increased house payments were made regardless of employment status and/or rate of pay at that time adjustments kicked in. In effect, this further reduced disposable income which had a devastating effect on U.S. economic activity.
Less money to spend translated to fewer products required, produced, imported and sold. Less products and services consumed results in fewer people required to provide such products and services. The scale of fluctuations by which this happens varies over time but since President Reagan, the fluctuations had been fairly small.
That is until June of 2008 when CEOs could foresee the coming change and who would be the future President of the United States. There was enough information available to see a President Obama in Office would bring socialist programs to the table.
Foreseeing Obama in Office, companies had a valid operating requirement to further reduce spending and bank cash to weather the coming political storm until it was clear how much the coming changes in America would cost the company.
To do anything else would risk the jobs and payroll of every employee in the company. Most simply halted hiring while letting nutrition handle employee reductions where other producers hit by national reductions in disposable income had to execute layoffs.
It would later come out that a small group of news reporters totaling four to five hundred of the JournaList ListServer would manipulate and smoke screen any negative or controversial information regarding then Presidential Candidate Obama. This made it difficult for voters to make a clear choice.
And, they (JournaList) did a good job – the jury is still out on whether Barrack Obama is qualified under the American Constitution because his records have been sealed. No one really understood and many still don’t understand Obama’s political standing because news reporters provided and/or continues to provide disinformation to the public.
Higher monthly gas expenses, debilitating increases in home and property tax payments reduced consumer spending while the instability of an anti-business political policy loomed over the country commanded labor force reductions.
Banks may have delayed mortgage adjustments in the mist of the impact on national disposable incomes, risk of non-performing loans and reduced shareholder value. But there’s no empirical data suggesting that alone would have positively affected the economy.
The hidden accolade of Barrack Obama’s history and lack of political experience provided significant evidence his policies would target job builders and those generally employed to benefit persons who “refuse to work”. After all, those who “can’t work” are better cared for in America than anywhere else in the world.
One only needs to look at the affect of policies enacted since President Obama took office at the beginning of 2009 to fully understand the impact. Business has not expanded, disposable income while low has been artificially paid for by increased U.S. Debt and job builders are only testing the waters while the political environment remains in flux throughout 2012.
There’s more to it than just the numbers.
Thanks for stopping by. I agree with a lot of your points here, though not all of them. That said, it’s good to see someone finally making an argument with a strong conservative perspective. That too often see too many arguments from the left that still blame President Bush entirely for the current economic malaise and it is starting to get tiresome, especially based on the facts of the situation.