December jobs report: the 75th consecutive month of positive job growth, the longest on record

The December jobs report is the final jobs report of the Obama era. It offered the latest in a series of reminders that the president is handing off a healthy economy to his successor, Donald Trump (who spent the campaign denigrating Obama and declaring the economy to be a disaster).

Steve Benen has the December jobs report. Obama era ends with steady job growth:

The Bureau of Labor Statistics reported this morning that the U.S. economy added 156,000 jobs in December. The unemployment rate, meanwhile, remains low, inching higher from 4.6% to 4.7%. It’s the 15th consecutive month the rate has been at 5% or lower. (Remember when Mitt Romney said he might be able to get the jobless rate down to 6% by the end of his first term? I do.)

DecemberJobs

As for the revisions, October’s and November’s job totals were both revised up, adding a net gain of 19,000.

Also of interest, this report showed a larger-than-expected hike in average hourly earnings, suggesting not only that job growth is steady, but American wages are improving, too.

Though the latest data still faces some revisions, the preliminary estimates now show the overall economy added 2.15 million new jobs in 2016, which is a pretty healthy number. What’s more, December was the 75th consecutive month of positive job growth, which is the longest on record.

Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.

DecemberPrivate

Remember, as we discussed last month, as far as Republicans are concerned, results like these were completely impossible. For the right, the combination of the Affordable Care Act, higher taxes, and assorted regulations would stifle job growth and push the economy into a recession, but the exact opposite happened. Nevertheless, Donald Trump and GOP lawmakers believe they’ll “get the economy moving” by undoing the policies that brought us to this point.

We’ll see how that works out.

If history is any guide, it will not work out well. I have posted the hard economic data several times over the years which supports the truism that “Democratic presidents are always better for the economy.” Facts are facts, except in the fact-free post-truth world of conservative media.

Don’t take my word for it. Jere Glover recently wrote at the conservative Forbes magazine, Trump Is Right About One Thing: ‘The Economy Does Better Under The Democrats’:

[I]t might surprise you to hear that I agree with Donald Trump’s top line view of the economy.

* * *

I’ll give credit where credit is due. Donald was absolutely right when he told Wolf Blitzer in 2004: “I’ve been around for a long time and it just seems that the economy does better under the Democrats than the Republicans.”

That’s right. Trump said out loud the same thing that Hillary Clinton has asserted—and top academics and journalists have confirmed. The same thing I’ve been compiling cold, hard government data on since 1980: By crucial metrics like GDP, job creation, business investment and avoiding recessions, the economy does a lot better with Democrats in the White House than with Republicans. Just one eye-opening example: Nine of the last 10 recessions have been under Republicans.

* * *

[T]o borrow a phrase often attributed to Casey Stengel, “you could look it up.” And not just on my website, www.presidentialdata.org, though the data is all there. This is good, old, green-eyeshade government data. As New York Senator Daniel Patrick Moynihan used to say, “you’re entitled to your own opinion but not your own facts.”

It is simply a fact that since World War II, Democratic presidents have seen 24.4 million more jobs created on their watch—an average of 78.6% more jobs created per year of Democratic administrations—than have Republican presidents. Ditto real GDP growth, 44% higher under Democratic presidents. On the flip side, unemployment has been 18% higher under GOP presidents . . .  Real business investment has been 193% higher under Democratic presidents.

Jared Bernstein writes at the Washington Post, Obama hands off a solid labor market to Trump. Now what?

With this morning’s report on the December labor market, another year of solid job growth is in the bank. Last year was the sixth year in a row of 2 million-plus net job gains, and the year ended with a jobless rate of 4.7 percent, just about what the Federal Reserve considers to be the unemployment rate at full employment.

One bit of news in the report especially caught my eye: nominal wages grew 2.9 percent in 2016 (December-to-December), their fastest growth pace since mid-2009. That’s evidence that the tight job market is doing the thing I consider to be most important: creating more bargaining clout for workers. When unemployment gets and stays low enough, employers have to bid up wage offers to get and keep the workers they need. Unlike the Fed, I don’t think we’re quite there yet, i.e., at full employment, but we’re close, and that’s helping working families.

* * *

I give the Obama administration and the Fed great credit for their interventions during the Great Recession, which demonstrably helped to turn the tide more quickly than would have otherwise been the case (Full disclosure: I served in the administration in the early days). But those who foolishly claim the government doesn’t create jobs are simply ignorant of the facts: There are 22.2 million government jobs in the United States. Moreover, as economic recoveries mature, the forces that create jobs are many and varied, and while government policy is always in the mix, it is not nearly the dominant force people in this town tend to think. (The Fed is another story, which I won’t get into here but have extensively elsewhere; see chapter 4 here.)

So, what is important? What are those forces behind the 15 million jobs created since payrolls begin consistently expanded in late 2010?

The fundamental principle of job growth is derived demand. That is, employment growth is derived from the demand for the services and goods that people want to consume and invest in. I’m talking about haircuts and factories, salamis and laptops, vacations and roads, homes, dogs, cats, clothes, cars, and on and on and on. In the most recent quarter, consumer spending was about $13 trillion, almost 70 percent of GDP. Private investment, including housing, was another 16 percent; government (at all levels), makes up the rest (I’m leaving out foreign trade for a moment).

When we economists go on about “demand,” as in “we need more demand in this recovery,” this is what we’re talking about. The more people are able to consume and invest to meet their needs and wants, the more jobs (I realize this sounds both hyper-acquisitive and non-green; but it need not be, at least re the latter: People can consume green/renewable energy, mass transit, etc.). The more jobs, the tighter the job market. The tighter the job market, the greater the bargaining power of low- and middle-class workers. The greater their bargaining clout, the better the chance they’ll see some of the benefits of their labor show up in the paycheck, as we’ve finally seen occurring in recent months.

Now, let’s get back to policy. What does Washington have to do with any of the above?

I’ve already mentioned the countercyclical role but we’re now able to put that in context: When private sector demand collapses, the federal government must step in and temporarily replace the lost demand through stimulus spending. But what about in mature economic expansions, like this one?

Well, for one, policymakers must ask: Is the recovery reaching everyone? In fact, there are groups of workers, including minorities and those in certain parts of the country, that consistently face demand shortfalls. That’s why even with unemployment below 5 percent, it would be useful now to invest in public infrastructure, as that could help pull more sidelined, prime-age workers into the job market (it could also probably help boost productivity growth, by improving the quality of transportation infrastructure critical to supply chains). However, if we want the best bang for the buck, we need a program unlike the one Trump has promoted, which relies not on direct spending but on tax credits for projects with user fees.

Next, it is worth noting that while demand creates jobs, it doesn’t necessarily create good jobs. Here policy is essential. Labor standards like minimum wages and overtime, union representation and the extent of the trade deficit are all important.

Regarding that last point, team Trump has, to its credit, elevated the issue of international trade and neatly connected it to the demand for good, high-value added factory employment. But while these are still early days, we’ve yet to hear any good ideas to reduce our persistent and economically large trade imbalances. Tweet-shaming China and threatening trade wars won’t work. When Trump says he wants to renegotiate the North American Free Trade Agreement or the Trans-Pacific Partnership, it’s not at all clear to me on whose behalf he’s planning to negotiate. By the looks of his hugely regressive tax cuts, it’s not the displaced workers on the wrong side of globalization.

Which brings me to my final point. Presidents may have a lot less to do with job growth in a mature expansion than in a recession, but they can definitely screw things up (or, slightly more technically, squelch demand) especially when they’re guided by ideology, thin skin and crony capitalism that pays back their funders. High tariffs, trade wars, wasteful tax cuts, deregulating financial markets (thus tempting future recession-inducing bubbles), whacking the safety net and breaking the health insurance market all come to mind.

The president-elect is inheriting a favorable demand trend. Whether he and his team know how to nurture and protect it … well, that’s yet to be seen.

14 responses to “December jobs report: the 75th consecutive month of positive job growth, the longest on record

  1. John Huppenthal

    Ok, let’s get more numeric. You can pretend that 1.5% job growth for all of 2016 is healthy but only if you are comparing us to Europe. And, you can pretend that the trend isn’t flat as a pancake but it is.

    1.5% job growth is not enough to raise incomes.

    We need welfare, regulation and high taxes to release their victims: the job seekers and the job creators.

    There is a reason that the stock market hit 24 trillion dollars – it believes that Trump is going to do something besides give things away for free.

  2. As is always the case with these job reports, AzBM, they don’t really address the issues of: (1) People who have dropped out of looking for work and are no longer counted as “unemployed”; and, (2) The number of people having to hold two jobs in this “booming economy” just to make ends meet. In other words, there are good job reports and there are Obama job reports. All your cheer leading won’t change that simple fact, my friend.

    • AZ BlueMeanie

      You could look it up for yourself, but you are just too damn lazy and follow that idiot Huppenthal’s trolling. BLS press release https://www.bls.gov/news.release/pdf/empsit.pdf

      Household Survey Data

      The unemployment rate, at 4.7 percent, and the number of unemployed persons, at 7.5 million, changed little in December. However, both measures edged down in the fourth quarter, after showing little net change earlier in the year. (See table A-1.)

      Among the major worker groups, the unemployment rates for adult men (4.4 percent), adult women (4.3 percent), teenagers (14.7 percent), Whites (4.3 percent), Blacks (7.8 percent), Asians (2.6 percent), and Hispanics (5.9 percent) showed little change in December. (See tables A-1, A-2, and A-3.)

      The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.8 million in December and accounted for 24.2 percent of the unemployed. In 2016, the number of long-term unemployed declined by 263,000. (See table A-12.)

      The labor force participation rate, at 62.7 percent, changed little in December and was unchanged over the year. In December, the employment-population ratio was 59.7 percent for the third consecutive month; this measure showed little change, on net, in 2016. (See table A-1.)

      The number of persons employed part time for economic reasons (also referred to as involuntary part- time workers), at 5.6 million, was essentially unchanged in December but was down by 459,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job. (See
      table A-8.)

      In December, 1.7 million persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

      Among the marginally attached, there were 426,000 discouraged workers in December, down by 237,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available to them. The remaining 1.3 million persons marginally attached to the labor force in December had not searched for work for reasons such as school attendance or family responsibilities. (See table A-16.)

      It is curious that both you and Huppenthal ignored the part of the post which demonstrates that the economy always does better under Democratic presidents – always. So you are cherry-picking a random number you think proves something that it does not just to be disagreeable. Such is the life of a troll.

      • John Huppenthal

        The economy is still “under Reagan.” His personal tax reduction from 72% to the now 39% is still the defining characteristic of our economy. It is what separates us from France.

        Trump’s promise and evident likelihood to move back towards the original Reagan rates of 28% is what is causing the stock market to hit $24 trillion.

      • “You could look it up for yourself, but you are just too damn lazy…”

        I did look the numbers up before I wrote back to you. That is why I knew you and the people you quoted had glossed over them when presenting another of your glowing Obama Job Reports. If those numbers had been positive, you would have found a way to include them and I would have been foolish to even mention them. The information is there but you choose not to report it because you are gilding the lily and have done so with all the job reports in the past. As far as “cherry picking” is concerned, I was just pointing out some number that you failed to include because they weren’t particularly good. I know you are an honest man, but I want to applaud your honesty in posting them here.

        I didn’t mention the greater success that democrat Presidents have in the microeconomy than Republican Presidents because I happen to agree with you. I saw no reason to argue the point. However, I think that Republican Presidents do better when it comes to the macroeconomy than democrats.

        Actually, the life of a troll is pretty good. Lots of interesting discussions, spirited arguments, fascinating new perspectives on contemporary history…there is a lot going on. I want to thank you and the other principals on this blog for letting people like me participate here. I know it can sometimes be a pain in the behind for you all, but it speaks volumes about what decent people you are.

  3. As always, with “Hoop” it’s what he leaves out with his “research”. From US Bureau of Labor Statistics:

    Current: 59.70%
    US Employment Population Ratio for Oct 2016 — reported Nov 4, 2016
    Mean: 59.21%
    Median: 58.60%
    Min: 54.90% (Oct 1949)
    Max: 64.70% (Apr 2000)

    • Maybe, but he always reminded me of that old Will Rogers line, referring to Herbert Hoover: “It’s not what he doesn’t know that worries me. It’s what he knows for sure that just ain’t so.”

    • John Huppenthal

      Are you saying that your data is different than mine?

      59.7% is not an impressive employment number for December 2016. Dec 2015 is 59.6% those are not two different numbers. Flat as a pancake.

      Our economy has the potential to hit 85%. We are not making progress.

      • No, we actually don’t.

        The population of the US is currently about 324 million.

        Of those, 70 million are under the age of 15. Another 25 million are over the age of 70

        If literally every person between the ages of 16 and 70 were working, we’d have an employment/population ratio of 70.7% (229/324). But of course, some people have the chance to retire before age seventy. And some people are currently in school full-time and not in the work force. Add in another 2 million in prison, some more who are severely disabled and cannot work, the handful of trust-fund babies who never had to work, and all of the sudden, going much higher than 65% seems a little unreasonable.

        But wait, a skeptic says. Those figures aren’t right. It’s not fair to include people 15 and younger in that data. So let’s exclude them like the government does.

        The number of people who have at least part-time employment is 152,111,000 or so: http://www.tradingeconomics.com/united-states/employed-persons

        The total population of the US is about 324 million.

        Take away the 70 million 15 and under and you get 254 million. 152/254 gets you to 59.8%.

        There’s about 12 million people in 10th through 12th grade who are 15 and older, a similar number in full-time higher education who aren’t working, 2 million in prison, and probably 3-4 million people retired under the age of 70, on top of the 25 million who are age 70 and older.

        Take those away, and I see a hard cap of 78.7% (200 million / 254 million age 15 and over). But then we have to add in the fact that there’s non-zero lag resulting from structural and frictional unemployment through no fault of anyone. That’s about 4-5% of the labor force, so another 6-7 million people are currently between jobs. Now, that number is down to 76.3%

        But perhaps I should put it another way – if 85% is so achievable if not for that pesky federal government getting in the way, why did your hero Ronnie ‘Union-Buster’ Reagan never get that ratio higher than 63%?

        I mean, maybe your idea of a utopia is to force as many people as possible to work as long and as hard as possible for as many years as possible, and then drop dead at 65, since all of your arguments come back to ‘work is good, leisure is bad’. And maybe that’s what you yourself enjoy – I won’t knock it. Maybe you should get back to work instead of wasting valuable daylight time here that you could spend toiling to make more money and growing the economy.

        • John Huppenthal

          Hmmm…. more than impressive. You actually know something and can do analysis.

          Behavior and the economy adjust slowly – most of the time. But, some of the time, the changes happen explosively and quickly. Gingrich’s welfare reform quickly emptied half of all people off welfare giving us a glimpse of what can be achieved with both low tax rates and an elimination of the welfare system. The employment to population ratio hit 64.7%

          The popular liberal talking point to explain away the recent poor job creation has been the aging of the population. But, there is substantial evidence that this is artificial. One of the Federal Reserve Board members recently calculated a Extensive elasticity of 3.0 from the provisions of the Social Security System. This means that eliminating these provisions from Social Security would produce an explosive increase in employment among the elderly.

          Likewise, the disability system appears to have locked millions out of the workforce. We have nearly double the percentage of the population on permanent disability. When I was a Senator, I had two powerlifters lobby me for changes to the permanent disability system. It was all I could do to maintain a straight face.

          The trapping effect of welfare is overwhelming- there are numerous studies showing such.

          Minimum wage not only takes a couple of million more but changes the entire arc of their lives.

          And, I work every day. I teach math to the most highly at-risk students in the states and I also do an afterschool program. More importantly, I teach them to work. Typical students in these risk class do 2 minutes of math per day. So far this year, my students have averaged 41 minutes of math a day, actual on task doing problems work. And, they have fun doing it, otherwise there would be no way that I could get them to do it – these students hate the traditional classroom. It doesn’t work for them. My goal is to have them close the ethnic achievement gap by the end of next year and I am on track. Billions have been spent and no one has been able to develop a system to do this.

          I don’t want to force anyone to work. Quite the contrary, I want every human being to have five jobs waiting for them so that if their employer isn’t treating them in an excellent fashion, they can say adios. Right now, there are so few jobs that people, particularly the vulnerable and the young, have to live in fear and put up with workplaces that are less than optimal and not fun. That’s a tragedy.

          • > Quite the contrary, I want every human being to have five jobs waiting for them so that if their employer isn’t treating them in an excellent fashion, they can say adios. Right now, there are so few jobs that people, particularly the vulnerable and the young, have to live in fear and put up with workplaces that are less than optimal and not fun. That’s a tragedy.

            That of course, isn’t likely to occur, because the Fed won’t allow it. As we both know, if there is a substantial shortage of labor such that there are so many jobs for every worker, then the logical consequence is that certain employers will have to increase wages, and based on the elasticity of their product(s), will be able to pass some of that additional cost onto the customer in the form of higher taxes – perhaps 50% or so. But the Fed will see this happening and clamp down on the economy in the form of higher interest rates in order to prevent a wage-price inflationary spiral. This is because the Fed is owned by the member banks, and banks have an interest in keeping inflation low and stable. We did see some of this occurring in the late 1990’s, which was largely brought on by the tech boom, but was mitigated somewhat by the deflationary fiscal policy (read: budget surpluses) under Clinton.

            Where you won’t get an argument from me is that there are trapping effects to the current welfare system, or how disability benefits through Social Security / SSI currently work. I agree that we should be restructuring our welfare net such that people who are able to work part time do not lose all of their benefits, instead either slowly tapering them off over a range of incomes, or, because I don’t share your optimism about the growth of the economy, nor the continuing demand for low-skill labor, some sort of basic income mechanism put in place as a way to supplement people’s work income. It’s fairly well-established, even by traditionally conservative economists such as Friedman, that a system of basic income is preferable to the means-tested, bureaucratic hodgepodge we currently have in place.

            Now, perhaps tightening old-age payments to Social Security recipients would get some more elderly people working. But I’m not so sure I like the idea of 75 year olds packing groceries for $4 an hour so they can afford to eat dry cat food and maybe half of their generic prescriptions.

            If I had to fancy a guess as to what is hobbling the economy, I would target the job-lock resulting from the high cost of healthcare and the inability of many to get affordable coverage outside of employer-sponsored care, along with the high costs of college tuition which makes it difficult for many new college graduates to buy houses / start businesses / delay marriage / etc.

  4. John Huppenthal

    You are pretending that the employment picture is healthy. It is not. The employment to population ratio is 59.7% – dead flat for all of 2016. That’s the real trend.

    That is also where we were at in October of 1978. Further, it means that unemployment of adults is 40.3%.

    • For Sure Not Tom

      And you are pretending that things are not better under Obama, a Democracy, than they were under Bush, a Republican.

      But they are better.

      At least you’re not pretending to be Falcon9 today.

    • The employment to population ration may be correct but how do you just subtract that number to get 40% unemployed? That is much too simple a formula. What job are you suggesting for the 5 to 7 year-olds? Chewing gum checkers?