It came as a shock – the pleasant kind of surprise that sent the stock market soaring to levels not seen in a long time. The January employment report, released last Friday, showed a growth of 240k jobs last month. It was good news for everyone, but especially for President Obama. The story of the first three years of his Presidency has now been written in the job reports:
One year down, two years back up. We’re back to even and working to get ahead.
The data are shown below from the Federal Reserve of St Louis. It’s a chart worth getting to know for not only its curious shape, but how it shapes the election ahead:
When Obama took office (here as 1 Feb 2009) 800k jobs were being lost every month. That loss continued until we hit the bottom in February 2010, with a total loss of 3.6M jobs in the US (2.7% of total jobs). Since then, jobs have been increasing through a few fits and starts to where we are today – down a net 428k for the whole Obama administration. Two more months like we just had and it’ll all be even.
Three more months like we just had and the total job creation in the Obama administration will be equal to the total net gain during the Bush administration (310k).
While this is a stunning turnaround, the work that needs to be done is far from complete. If we back up the same graph just a little bit we can see how big the hole is, starting from the peak in total jobs in Jan 2008:
After a loss of 9M total jobs a net gain of 3.6M may not get us totally back to even, but it shows forward progress. And that may be enough to change the mood of the nation around.
It’s always difficult to credit or blame a President for what happens in an economy, given that we are not a socialist nation (despite some of the rhetoric). Yet that is exactly what happens during a campaign because it is an easy argument to make – and it’s something most Republicans have claimed about Obama since jobs are very much on everyone’s minds. Getting the job count back to even through this administration so far is a huge achievement because it will set the tone for the election season still ahead of us.
We also can’t say exactly why job growth is robust and reasonably steady, since it is clearly ahead of economic growth when compared to a typical postwar Recession. However, we are clearly in a different kind of an event, one that most people now seem to agree is a Depression. Seeing job growth lead economic recovery makes sense when the problem is a lack of demand and dramatic decline in consumer spending. Employers have generally been slow to hire in part because of anxiety about our economic future, so a change in mood is probably fueling this turnaround as much as anything else.
What we do know for a fact is that the first three years of the Obama administration have a story written in the first graph shown. He inherited an economy that was dropping off a cliff, and continued to do so for a year. Since that time, it’s turned around.
One year down, two years back up to even.
Taking the rhetoric of fear and panic out of this election may change it dramatically as we go ahead. There are growing signs that even reasonably conservative voters have come to realize that more fundamental changes are necessary – and that the old slogans and symbols are not doing us any good at all. Faith in “Supply Side” economics has dropped off for the simple reason that it did nothing to prevent the terrible slide shown in the second graph, and may have even helped to cause it.
Certainly, in an economy with highly liquid capital markets open to nearly everyone with some 401(k) money to invest the difference between “earned income” (wages) and investment income has become completely blurred, making arguments for different tax rates questionable at best. Who creates jobs? We all do, as we can see. Job growth is leading economic growth as investment capital sits idle.
Getting back to even on jobs is a huge achievement for the Obama administration. It’s an achievement for us all because it changes the rhetoric of this election cycle. Hopefully the theme of this election will now become gaining back the other 5.4M jobs lost to a lot of economic theories and slogans that never did deliver as promised. That will be the way forward – a truly Progressive vision.