02 November 2012

Comparing Presidential Jobs Numbers Before Election Day

The bureau of labor statistics announced that 171,000 jobs were created in October. In addition, they revised numbers for the last two months upwards (August revised up from 142,000 to 192,000 and September up from 114,000 to 148,000.) So essentially, the BLS announced an additional quarter of a million new jobs today, a number much better for the economy than Romney's campaign.

[To play with the question of whether president's even matter to job growth, go to the end of the post.]

So we now have the final number before the election, giving us a basis for comparing Obama to president's dating back nearly half a century. If we just measure from the administration's first full month in office (February after being sworn in) until the October before the election, we get the following ranking of of the last 8 administrations in terms of job growth.

In millions:
Clinton       10.8
Carter         9.8
Johnson       9.1
Nixon         5.2
Reagan       4.6
HW Bush   1.9
Obama        .9
GW Bush   -.3

Here's a graph showing the cumulative numbers of jobs grown during their administrations.

Here Obama looks nearly as bad as Bush. But as Obama repeatedly reminds us, he inherited a very bad economy. Let's examine that, separating out the first year from the rest of their term. And, let's do that for every president.

Johnson   2945
Nixon      1738
Carter      3903
Reagan    -474 
Bush 1     2018
Clinton     2749
Bush 2    -1878
Obama   -4282

As you can see, the recession that Reagan inherited was only one-tenth as bad as Obama's. No president in the last 50 years was greeted with such dramatic job losses as was Obama, totaling 4 million lost jobs in his first year. Here you can see the cumulative job creation or loss during the first year of each administration - Obama's first year numbers dramatically lower than any other. That is a huge hole to dig out of.

So let us assume that Obama was right that a global recession that began the year he before he was sworn in had nothing to do with his policies, and discount the first year of his (and every) presidency. (And in fact, the budget of the first year is inherited from the previous administration.) Subtracting the first year from the job numbers, Obama's ranking changes dramatically.

In millions:
Clinton       8.1
Carter        5.9
Reagan      5.0
Obama     4.5
Nixon        3.5
GW Bush  1.5
HW Bush  -.1

Here is the graph of the cumulative jobs created / lost from years 2 through 4. In this ranking, Obama falls between Reagan and Nixon, two presidents who won re-election by a landslide.

Obama seems the probable winner, but by no landslide. One simple explanation is that nearly half of Americans hold him responsible for job growth during all four years, and slightly more than half hold him responsible for only the last three.

[Do these numbers matter?]

Now it is worth asking a very basic question: does the president really impact job numbers at all? Is this fixation on job growth as a measure of presidential efficacy a modern version of holding the medicine man responsible for rainfall? It is true that the economy is a product of many variables other than the president. For one thing, his policies affect the numbers only to the extent that Congress cooperates. And, of course, economies surge and stumble for more important reasons than presidential policies, reasons as varied but powerful as new technologies (Internet anyone?), global competition (rise of China and Brazil bringing another billion workers into competition with ours), demographics (baby boomers entering or leaving the job market), global financial crisis (the '08 financial crisis), domestic crisis (9-11) and so on.

Even so, it seems that presidential policies matter. There are a lot of men who love alcohol and love their families; the men who love alcohol more than their families have very different lives than the men who love their families more than alcohol. President's who value job growth more than, say, inflation or balanced budgets have very different economies than those who value balanced budgets more than GDP or job growth.

Austerity measures in Europe, their attempts to balance budgets in the midst of a global recession, have been disastrous. The UK went into a second recession; Spain's unemployment is near 25%. David Cameron in the UK and Spain's Rajoy tried to first balance the budget and then grow the economy, valuing fiscal responsibility more than job growth. That's a bad policy and their economies are still suffering because of it.  Neither tax hikes nor cuts in government spending help during a recession. The impact of presidential policies during a time of full employment are less obvious, but probably still greater than zero. I'll leave the reader to decide whether the influence of presidential policies is closer to 5% or 50%.

But the president's actual impact on job growth hardly matters for this simple reason: voters think it does.  For that reason alone, it is worth giving the numbers more than a cursory look.

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