It's the Economy

Five Presidents at 23 Months: What Looming Recession?

The monthly jobs report is more than just one number. The report is created using two data sets, seasonally adjusting the data, and reporting the data. Sometime job gains, or worker gains, are recorded lower and reported higher than the headline number. Sometime the data is recorded higher and reported lower. The seasonal factors change month to month, season to season, and year to year. 

A strong number was expected and projected in the article “Decidedly Good December Jobs Forecast.”  The report was even stronger than expected. The article “Final Jobs Report of 2018 was Stellar” explained how the non-seasonally adjusted Current Employment Statistics worker data  rose while the non-seasonally adjusted current population survey jobs data fell. “Strong Worker and Wage Growth” explained how jobs growth could be a forward economic indicator because we saw average hours worked increase December to December, average hourly wages increased.

December to December, and the number of actual workers grew December to December. The number of non-seasonally adjusted jobs fell, as expected. The drop was not as large as it was during December 2016 or December 2017. This drop in jobs was seasonally adjusted into a gain in jobs. The non-seasonally adjusted increase in unemployed workers was maintained in the seasonally adjusted version. Participation rose.  This article examines the Current Population Survey (CPS) jobs data and unemployed workers data versus the Current Employment Statistics (CES) worker data.

How is President Trump doing compared to his predecessors? This is a question that has been asked since the seventh year of the Obama Administration. We were told back then that this was the best economy since former President Clinton. The assertion seemed laughable. It took some digging into the data, the non-seasonally adjusted Current Population Survey data, to find that this was not entirely true. The three part series “Four Presidents at 81 Months” examined the full-time job creation, part-time job creation, changes in unemployment, and changes in population for Presidents Reagan, Clinton, George W Bush, and Obama at the same point in their Presidencies. A new Presidency meant the series had to be renamed to “Five Presidents at __ Months.”

President Trump has added more full-time jobs than his predecessors combined. President Trump has overseen the addition of 6.1 million full-time jobs. P Former President Reagan saw full-time jobs drop by 1.274 million. Former President Bush saw full-time jobs drop by 262,000 workers. Former President Obama saw his full-time numbers down 2.608 million from inauguration during December 2010. Only former President Clinton saw the addition of 4.311 million full-time jobs.

President Trump was the only President to trim Part-time jobs. Stop the presses. It isn’t that bad. The total growth in full-time and part-time jobs is better than what former Presidents Regan, George W Bush and Obama individually achieved, and is better than what they achieved combined.Former President Clinton has added more jobs than President Trump. It is important to note that there is a big difference between a net increase of 6 million full-time jobs and a net increase of 4.3 million full-time jobs and 3.4 million part-time jobs..

Former President’s Reagan, Bush, and Obama saw unemployment balloon during their first 23 months in office.  Only Clinton and President Trump saw unemployment fall during their first 23 months in office.

We are pulling out of the Participation Recession. There was considerable noise about how former President Obama did something that only President Reagan had done – Cut unemployment in half. The problem is that the former President’s participation rate dropped same month to same month “every” month that he was in office.There may have been one or two months where there were same month increases towards the end of his Presidency.  President trump started with a lower participation rate than any of the four predecessors mentioned. The non-seasonally adjusted unemployment rate is falling and participation in improving.

Why not look at he seasonally adjusted data as “everybody else does?” That assumes that “other people” examine the data and do not just read the report.  This month that assumption is a false assumption. The seasonal factors used to convert the non-seasonally adjusted data change month to month, season to season, and year to year.  This month the CPS data from 2011 through 2018 was revised. The changes were relatively minor. The thing is that it is easier to change the data than it is to change the narrative.   The revisions to the data meant that the former President’s unemployment rate fell more than originally reported. The unemployment rate for 2014 through 2018 were reported higher than they were originally reported. President Trump’s first November had a lower participation rate than originally reported. The former President saw his participation rate improve during November 2011-2012, 2014-2016. This is just the November data.

Is it fair to compare the data without adjusting for population changes? This column has addressed that question a number of times. Is a first-times number of under 300,000 claims relevant especially compared with data when we had 10 million, 20 million, 30 million, or even 90 million fewer covered insured? Does it matter now that we have 259 million workers compared to 239,000,000 under Obama, 219,000,000 under Bush, 198,000,000 under Clinton, or 173,000,000 under Reagan?I don’t make the rules, I just “do eyes,” for those “Blade Runner “fans.

But, President Trump inherited this economy from former President Obama.  All Presidents inherit the economy left to them by their predecessor. We normally see a change in the political party in the White House when voters sense a change in the economy. Former President Obama was trying to compare his final two years in office with President Trump’s first 21 months in office. This column published an article that compared the two covering the period of time from February 2015 through October 2016 with  February 2017 through October 2018. President Trump won that comparison.

How does President Trump’s first 23 months in office compare with the same time during the former President’s Administration? Former President Obama  saw 4.730 million full-time jobs added and 516,000 part-time jobs added during the 23 month period between February 2015 and December 2016. That is 5.246 million total jobs compared to 5.954 million jobs.  The drop in unemployment is slightly more than President Trump because he started with a higher level of unemployment than President Trump. You can find the data here.

We are not at full-employment. You are hearing and reading elsewhere that we are at full-employment. We cannot be at “full-employment” without “full-participation.”

  • December 1999: 3.75% Unemployment 67.01% Participation
  • December 2000: 3.68% Unemployment 66.96% Participation
  • December 2018: 3.71% Unemployment 62.77% Participation

If the changes in participation are factored into the unemployment rate then we are at an effective unemployment rate, or U-7,  closer to  10.00%. By comparison, the U-7 effective unemployment rate was 13.11% during December 2009 and 14.83% during December 1982.

Do Republican Presidents add more workers to the economy than Democrats? If you look at the “First 23 Month” graphs for the four Former Presidents and compare them with President Trump then you will find that President Trump has added 4.806 million potential workers  compared to President Bush at 4.853 million, President Obama at 4.150 million, President Reagan at 4.095 million and President Clinton at 3.803 million workers. The workforce population data grows in fits and starts. The population data is revised every January.  If you examine the data from the “Four President’s at 96 months” article you will find that President Obama’s final jobs report boosted his participation rate by reducing his workforce population. If you examine the “Five Presidents at 12 months” article then you will find that the workforce population was revised higher by the same percentage as President Obama’s was reduced. The changes in the workforce population matters. Participation Matters.

We are climbing a jobs mountain after nearly a decade of a jobs iceberg. The jobs data, especially the wages and hours worker data, can be used as a forward economic indicator. If more people are working full-time jobs, and they are earning more doing so, then the economy will continue to grow. This column has argued that we will  see changes in the weekly claims data before we will see it elsewhere. The data last week was very strong, with continuing claims being 277,000 fewer than the same week last year. This bodes well for this week and next week. The first week of January tends to have the highest continuing claims level, non-seasonally adjusted, for the entire year. This report was reported as a strong report, and rightly so.Reports of an untimely recession are grossly exaggerated.

It’s the Economy.

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