Imagine If a Republican President Were Greeted by Friday’s Job Numbers

by Pejman Yousefzadeh on March 10, 2012

In that case, I highly doubt that the Republican president in question would have been able to benefit from the New York Times’s characterization of the job growth as “strong” in the headlines. The Times probably wouldn’t have buried the observation that “wages are lagging behind inflation” deep into the article. Rather, it would have highlighted the finding at the very beginning of its story. It probably wouldn’t have kicked the following down near to the bottom either:

Others said it had become easier to find income, but only via temporary or freelance jobs.

“My feelings are mixed about the recovery,” said Pam Sexton, 45, also of Kansas City, who was laid off by Sprint in 2009. “So far, I’ve managed to find work, but a full-time, permanent job is somehow elusive to me.”

Additionally, within the mainstream media, there likely would have been significantly greater focus on Sarah Morgan’s finding that the U.S. economy remains six million jobs in the hole, and that “the damage to employment done by the Great Recession is still far from repaired.” And comments from those like the following would be getting a whole lot more play:

“Overall the labor report is at least a positive step with key metrics heading in the right direction,” said Andrew Wilkinson, chief economist strategist at Miller Tabak in New York. “The problem is, however, that there are few signs that the pace of growth is accelerating and while we might be in for a series of decent reports like this, the February data is the bare minimum necessary to help expedite recovery. At its worst, the Fed will still be disappointed with ‘far from normal’ conditions within the labor market.”

Despite the upward trend in job creation, there remained strong doubts about whether the unemployment level could hold up.

The headline rate was at 9.2 percent as recently as June but has fallen since, benefited both by job creation and the Bureau of Labor Statistics’ byzantine method of calculating the number.

Though the labor force participation rate actually increased to 63.7 percent in February, it remains near historic lows. Those not looking for jobs are simply not counted in the official jobless rate. The rate is thus treated with skepticism as an accurate gauge for measuring the job market’s health.

If a Republican president were greeted by Friday’s job numbers, you would be seeing a great deal more focus on this:

While not shocking to most, the jump in temporary workers that we cited earlier is perhaps the biggest indicator of job ‘quality’ gains. As we discussed here last month, the US market economy remains mired in a low quality (“first-fired, first-hired categories rather than the type of core hiring that would build a stronger foundation for income growth,”  as FTN’s Jim Vogel describes it) recovery.About 160k of private jobs added in Feb are ‘low-paying work’ which left average hourly earnings up only 0.1% (notes David Ader at CRT) – hardly the recipe for a sustainable recovery and perhaps the slow leak in stocks post the number is the rude awakening to that reality.

[. . .]

Finally, two more charts, the first showing the NSA number of Part-Time jobs from the Household Survey. At 28,096,000 this number is just shy of the all time high of 28,106,000, and represents 19.4% of total employment. Second, as JT Smith reminds us, the number of people holding Multiple Jobs rose by 286K in February, more than the entire employed increase announced in the Establishment survey, and at 7,116,000 is now back to the highest since May 2010.

And this:

. . . America remains mired in the longest jobs recession since the Great Depression. It’s been 49 months since the U.S. hit peak employment in January 2008. And with nonfarm payrolls still 5.33 million below their old high, the jobs slump will continue for several more years.

The previous jobs recession record — 47 months — came during and after the comparatively mild 2001 recession, which saw unemployment climb to only 6.3%. The average job recovery time since 1980 is 29 months, not including the current slump.

The labor market won’t truly return to health until some 10 million positions are created to rehire all those who lost their jobs and to absorb new workers.

The longest jobs recession in decades coincides, not coincidentally, with the longest stretch of anemic economic performance on record.

U.S. gross domestic profit hasn’t risen 4% or more in any quarter since the first quarter of 2006. That’s by far the longest such stretch on record going back to 1950. The only other sizable sub-par stretch was a three-year span from late 2000 to mid-2003 during the prior recession and sluggish recovery.

The current expansion, which began in mid-2009, is particularly disappointing, given the deep recession that preceded it. The best growth was a three-quarter run of 3.8%-3.9% gains.

After the severe 1981-82 recession, the U.S. economy enjoyed a five-quarter stretch of 7% or more — following a 5.1% annualized gain.

The U.S. economy is up just 6.2% above the level at the end of the recession vs. 14.9% in the 10 quarters after the 1981-82 slump.

And this:

Even if it were a legit number, the 8.3% February unemployment rate, released today by the Labor Department, would be simply terrible—and unacceptable. It would still extend the longest streak of 8%-plus unemployment since the Great Depression. The U.S. economy hasn’t been below 8% unemployment since Obama took office in January 2009. And back in May 2007, unemployment was just 4.4%.

But, unfortunately, the true measure of U.S. unemployment is much, much worse.

1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.9% today—the U-3 unemployment rate would be 10.8%.

2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.4%.

3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.5%.

4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.9%.

And perhaps David Leonhardt wouldn’t be a lonely voice in the crowd when he tells us the following:

. . . the jobs report isn’t the only measure of economic activity, and another major measure — of gross domestic product — doesn’t look quite so cheerful. The most likely situation is that job growth will slow in coming months, economists say, which will make President Obama’s economic narrative a bit more complicated than it now is.

On Friday, Macroeconomic Advisers, one of the most closely watched forecasting firms, reduced its estimate of economic growth in the current quarter to an annual rate of 1.8 percent, from 2 percent. And 1.8 percent growth does not generally lead to very strong job growth. In the fourth quarter of last year, by comparison, the economy grew 3 percent.

Beyond the current quarter, forecasters expect the economy will grow at an annual rate of 2 to 2.5 percent for the rest of the year, according to Bloomberg.

Based solely on the gross domestic product numbers, the obvious conclusion is that job growth will slow in coming months. Over the last six months, the average monthly gain in nonfarm employment has been 201,000; over the last three months, the average gain has been 245,000.

Sure enough, most forecasters do expect job growth to slow. Barclays Capital expects 200,000 jobs a month for the rest of the year. IHS Global Insight forecasts a slowdown to 180,000 jobs a month. Macroeconomic Advisers says it will slow to 140,000 jobs a month in the final three quarters of this year.

And of course, if a Republican president were greeted by Friday’s job numbers, and his/her Tumblr tried to file those numbers under “Hashtag: progress,”, he/she would be laughed out of the political discussion.

But a Democratic president was greeted by Friday’s job numbers. And so, according to mainstream pundits who just happen to identify politically with that president, we are supposed to believe that the economy has nothing but smooth sailing ahead.

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