03 February 2012

Job Creation Come Back

As Obama was sworn into office, the global economy was melting down. In his first year in office, the US economy lost 4.2 million jobs, one of the worst years in our lifetime. Just last month, job creation numbers came in to complete his first three years in office, and it is interesting to compare the economy's performance during his 2nd and 3rd years with that of other administrations.

Compared to the performance under Clinton, Obama's total of 3.1 million jobs created is not particularly stunning, but it is 1 million more than under Reagan and nearly 4 million more than under the first Bush. Not so bad, in this context.

And as you can see in this graph, the trend seems to be moving in the right direction. The last few months have shown a strong uptick for job creation and if the trend continues, job creation during Obama's fourth year could outperform that of the three previous administrations. This is, in some ways, even more impressive given the uncertainty in European - and by extension American - financial markets through most of last year.

Now there are caveats worth mentioning. One, the labor force is the largest it has ever been so job creation would have to be higher (in total number) just to match (as a percentage of labor force). Two, we're coming out of a recession that destroyed millions of jobs and out of a decade in which job creation was negative. Because of this, it won't really feel like a full recovery unless job creation hits unprecedented levels; there is an incredible amount of lost ground to make up. Having said that, it is worth taking note that job creation under Obama's administration is actually quite strong.

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