I forgot to post the August jobs report last week because I have a life and I was busy, OK? After six consecutive months of job growth over 200,000 new jobs, the August jobs estimate slipped to 142,000.
Right on cue, the Chicken Little media villagers produced a slew of gloom and doom reports: “The sky is falling!‘
The vast majority of media villager know nothing about economics and the economy, in particular the labor market. Sorry media villagers, the sky is not falling. August historically has been a jobs estimate that gets revised upwards later (that’s why it is an estimate). POLITICO’s Ben White did a nice job supplying context:
Remember: August has been revised up by 77,000 on average last five years. It’s often weak on first read. No reason to freak. If you add the average August revision of last five years (+77,000) to this report you get 219,000, which was almost exactly the consensus. Give me another month of sub-200,000 and I’d be worried. One quirky August number won’t do it.
Now that’s cleared up, let me “freak out” the GOP-friendly media villagers who write these biased news reports, from Forbes magazine no less: Obama Outperforms Reagan On Jobs, Growth And Investing. You read that right! The Obama economy outperforms the mythological Ronaldus Magnus.
Adam Hartung writes at Forbes:
Back in May, 2013 (15 months ago) the Dow was out of its recession doldrums and hitting new highs. I asked readers if Obama could, economically, be the best modern President? Through discussion of that question, the number one issue raised by readers was whether the stock market was a good economic barometer for judging “best.” Many complained that the measure they were watching was jobs – and that too many people were still looking for work.
To put this week’s jobs report in economic perspective I reached out to Bob Deitrick, CEO of Polaris Financial Partners and author of Bulls, Bears and the Ballot Box (which I profiled in October, 2012 just before the election) for some explanation. Since then Polaris’ investor newsletters have consistently been the best predictor of economic performance. Better than all the major investment houses.
This is the best private sector jobs creation performance in American history
Bob Deitrick: ”President Reagan has long been considered the best modern economic President. So we compared his performance dealing with the oil-induced recession of the 1980s with that of President Obama and his performance during this ‘Great Recession.’
“As this unemployment chart shows, President Obama’s job creation kept unemployment from peaking at as high a level as President Reagan, and promoted people into the workforce faster than President Reagan.
“President Obama has achieved a 6.1% unemployment rate in his sixth year, fully one year faster than President Reagan did. At this point in his presidency, President Reagan was still struggling with 7.1% unemployment, and he did not reach into the mid-low 6% range for another full year. So, despite today’s number, the Obama administration has still done considerably better at job creating and reducing unemployment than did the Reagan administration.
“We forecast unemployment will fall to around 5.4% by summer, 2015. A rate President Reagan was unable to achieve during his two terms.”
What about the Labor Participation Rate?
Much has been made about the poor results of the labor participation rate, which has shown more stubborn recalcitrance as this rate remains higher even as jobs have grown.
Deitrick: “The labor participation rate adds in jobless part time workers and those in marginal work situations with those seeking full time work. This is not a “hidden” unemployment. It is a measure tracked since 1900 and called ‘U6.’ today by the BLS.
“As this chart shows, the difference between reported unemployment and all unemployment – including those on the fringe of the workforce – has remained pretty constant since 1994.
Source: Bureau of Labor Statistics – Databases, Tables and Calculators by Subject
“Labor participation is affected much less by short-term job creation, and much more by long-term demographic trends. As this chart from the BLS shows, as the Baby Boomers entered the workforce and societal acceptance of women working changed, labor participation grew.
“Now that ‘Boomers’ are retiring we are seeing the percentage of those seeking employment decline. This has nothing to do with job availability, and everything to do with a highly predictable aging demographic.
“What’s now clear is that the Obama administration policies have outperformed the Reagan administration policies for job creation and unemployment reduction. Even though Reagan had the benefit of a growing Boomer class to ignite economic growth, while Obama has been forced to deal with a retiring workforce developing special needs. During the eight years preceding Obama [i.e. Bush] there was a net reduction in jobs in America. We now are rapidly moving toward higher, sustainable jobs growth.”
Economic growth, including manufacturing, is driving jobs
When President Obama took office America was gripped in an offshoring boom, started years earlier, pushing jobs to the developing world. Manufacturing was declining in America, and plants were closing across the nation.
This week the Institute for Supply Management (ISM) released its manufacturing report, and it surprised nearly everyone. The latest Purchasing Managers Index (PMI) scored 59, two points higher than July and about that much higher than prognosticators expected. This represents 63 straight months of economic expansion, and 25 consecutive months of manufacturing expansion.
New orders were up 3.3 points to 66.7, with 15 consecutive months of improvement and reaching the highest level since April, 2004 – five years prior to Obama becoming President. Not surprisingly, this economic growth provided for 14 consecutive months of improvement in the employment index. Meaning that the “grass roots” economy made its turn for the better just as the DJIA was reaching those highs back in 2013 – demonstrating that index is still the leading indicator for jobs that it has famously always been.
As the last 15 months have proven, jobs and economy are improving, and investors are benefiting
The stock market has converted the long-term growth in jobs and GDP into additional gains for investors. Recently the S&P has crested 2,000 – reaching new all time highs. Gains made by investors earlier in the Obama administration have further grown, helping businesses raise capital and improving the nest eggs of almost all Americans. And laying the foundation for recent, and prolonged job growth.
Deitrick: ”While most Americans think they are not involved with the stock market, truthfully they are. Via their 401K, pension plan and employer savings accounts 2/3 of Americans have a clear vested interest in stock performance.
“As this chart shows, over the first 67 months of their presidencies there is a clear “winner” from an investor’s viewpoint. A dollar invested when Reagan assumed the presidency would have yielded a staggering 190% return. Such returns were unheard of prior to his leadership.
“However, it is undeniable that President Obama has surpassed the previous president. Investors have gained a remarkable 220% over the last 5.5 years! This level of investor growth is unprecedented by any administration, and has proven quite beneficial for everyone.
“In 2009, with pension funds underfunded and most private retirement accounts savaged by the financial meltdown and Wall Street losses, Boomers and Seniors were resigned to never retiring. The nest egg appeared gone, leaving the ‘chickens’ to keep working. But now that the coffers have been reloaded increasingly people age 55 – 70 are happily discovering they can quit their old jobs and spend time with family, relax, enjoy hobbies or start new at-home businesses from their laptops or tablets. It is due to a skyrocketing stock market that people can now pursue these dreams and reduce the labor participation rates for ‘better pastures.”
Where myth meets reality
There is another election in just eight weeks. Statistics will be bandied about. Monthly data points will be hotly contested. There will be a lot of rhetoric by candidates on all sides. But, understanding the prevailing trends is critical. Recognizing that first the economy, then the stock market and now jobs are all trending upward is important – even as all 3 measures will have short-term disappointments.
There are a lot of reasons voters elect a candidate. Jobs and the economy are just one category of factors. But, for those who place a high priority on jobs, economic performance and the markets the data clearly demonstrates which presidential administration has performed best. And shows a very clear trend one can expect to continue into 2015.
Economically, President Obama’s administration has outperformed President Reagan’s in all commonly watched categories. Simultaneously the current administration has reduced the deficit, which skyrocketed under Reagan. Additionally, Obama has reduced federal employment, which grew under Reagan (especially when including military personnel,) and truly delivered a “smaller government.” Additionally, the current administration has kept inflation low, even during extreme international upheaval, failure of foreign economies (Greece) and a dramatic slowdown in the European economy.
If only Barack Obama were an old white guy, and a B movie actor for the idiot Beltway media villagers who eat that stuff up. See the consummate Beltway media villager, the always sophomoric Chris Cillizza of the Washington Post. President Obama has always been a terrible political actor.
The Beltway media villagers mythologized Ronald Reagan, and they demonize Barack Obama. The objective evidence says just the opposite should be true.