Pethokoukis

Is the Obama job market really equal to the Reagan job market? Please

Chris Cillizza of The Washington Post:

With the release of the September jobs report Friday, there’s also a more positive comparison — for Democrats — between Reagan and Obama that now can be made.

Check out the similarities in the unemployment rate during the first four years (or so) of the terms of Reagan and Obama:

While Reagan dealt with a much more rapid rise (and fall) in the unemployment rate during his first term, the parallels – particularly from the 34th month of the two presidencies on — are somewhat remarkable.

Actually, I find this analysis remarkable —  remarkably incomplete:

As should be obvious to everyone now, the current 7.8% unemployment terribly distorts the state of the U.S. labor market. The only reason the rate has fallen so quickly the past year — from 9.0% in September 2011 — is because of a continuing collapse in the labor force participation (LFP) rate.

When President Obama took office, the LFP was 65.7% vs. 63.6% last month. If the LFP had just stayed steady all year, the unemployment rate would still be in the mid 8% range. Indeed, over the past year, 1.1 million discouraged Americans have disappeared from the U.S. labor force.

When the unemployment rate fell sharply under Reagan over the same period — from 9.2% in September 1983 to 7.3% in September 1984 — the LFP rose to 64.1% from 63.5%. Optimistic Americans were pouring into the job market — and finding jobs! The economy was booming.

The decline in the unemployment rate under Reagan was a sign of underlying economic strength. Under Obama, the decline in the unemployment rate is a sign of underlying economic weakness. 

As I said earlier today:

Look at it this way: Back in June 1983, the economy added about 900,000 jobs, according to that same household survey. During the second quarter of 1983, the quarter that month falls in, the economy grew at an astronomical 9.3% annual rate. The supply-side Reagan Boom was in full swing.

Right now, in the third quarter of 2012, economists think the economy is growing at an an anemic 1.5% or so. So the economy was growing six times as fast in 1983 when it was adding that many jobs.

In fact, based on both the labor force participation rate and the employment-population ratio — simply the share of Americans working — there has been no healing of this labor market since the end of the Great Recession.

3. One other point: During the Reagan recovery, the U.S. labor market regained all the jobs lost during the 1981-82 recession in just 12 months.

During the more than 3-year Obama recovery, we have recovered only a bit more half of the jobs lost during the Long Recession, 4.3 million out of 8.8 million.

In 2012, employment growth has averaged 146,000 per month. At that pace, we won’t close the jobs gap – the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month — until after 2025.

Reagan vs. Obama? No comparison.

26 thoughts on “Is the Obama job market really equal to the Reagan job market? Please

  1. One last pathetic screed from someone went into anaphylactic shock at 8:30 this morning.

    YOU CANNOT COMPARE RECOVERIES BECAUSE NO TWO WILL BE ALIKE AND THAT IS BECAUSE NO TWO RECESSIONS ARE ALIKE, EITHER IN SCOPE OR CAUSALITY.

    YOU ARE NOT AN ECONOMIST. PERIOD.

        • Wrong, “cut and paste” Einstein. Volker came with 10% inflation and he gave us a 20% ff rate and that produced nearly 11% unemployment. Much worse than the last cycle.

          The Reagan ebound was launched from a much more difficult economy.

          • This is the last time I wil respond to you. You’re not worth it. But to say that Reagan started with a “much more difficult” economy speaks volumes of your economic illiteracy, and again, for those of you who did get past the 4th grade, without a mathematical BASIS or a set of IDENTICAL starting points, there is little point in comparing one recession or one recovery to another beyond making an historical observation.

            I’m surprised some of you idolators haven’t dug up Reagan’s bones by now.

        • Wrong, “cut and paste” Einstein. Volker came with 10% inflation and he gave us a 20% ff rate and that produced nearly 11% unemployment. Much worse than the last cycle.

          The Reagan rebound was launched from a much more difficult economy.

        • That’s just silly. Volcker’s high interest rates, to choke off inflation, caused a huge recession. Reagan’s tax cuts set off massive growth. From the “873,000 Jobs” story:
          “Look at it this way: Back in June 1983, the economy added about 900,000 jobs, according to that same household survey. During the second quarter of 1983, the quarter that month falls in, the economy grew at an astronomical 9.3% annual rate. The supply-side Reagan Boom was in full swing.”

          • Look at your history: Volcker’s steep REDUCTIONS in interest rates commenced BEFORE Reagan’s cuts took effect.

            You armchair economists act so surprised when mortgage rates are dropped by over 1000 basis points and claim tax reform spurred home buying.

            The romance and the myths go on. “If only…” you think to yourselves. It didn’t happen the way you think it did.

            http://research.stlouisfed.org/fred2/series/FEDFUNDS

  2. I wonder how much of the “collapsed labor force” during the Obama presidential period is due to aging “Baby Boomers” leaving the labor force? A lot of older folks lose their jobs to younger, cheaper workers, then either can’t find a job or can only get work making far less then they made previously. The result is often starting retirement earlier then they wanted or expected.

    • It is a factor, but I think it is one that is difficult to measure. Many have taken Social Security earlier, but some feel many older workers are in fact holding on to their jobs because their savings got obliterated in the crash. Its hard to hang your hat on any one thing.

  3. This is an excellent example of wildly exaggerating a peripheral number to come up with a grand (and incorrect, although philosophically aligned) conclusion.

    Reagan’s first term had a collapsing participation rate too (cleverly disguised by the giant red arrow pointing at the SECOND term), and although it didn’t fall as much, it was about as low as the low under Obama, and didn’t really perk up until 1985 (in case you’re not following along, that was Reagan’s second term).

    I could go on, but that alone turns this argument into a steaming crater. Sheesh, partisan pseudo-science bugs me.

    • Reagan’s first term had a collapsing participation rate too“…

      You have something credlble to back up that statement that I can link to?

      partisan pseudo-science bugs me“…

      Well don’t get your panties in a twist…

      • Uhhm, to the derision of the crowd here, I “Cut and Pasted” that evidence on another thread.

        The participation rate, has, in fact, not been this low since June of 1983. That was in response to Mr. Pethokoukis’ pathetic flailing that commenced at 8:30 yesterday.

        The reaction to good news- for which, as Americans, we should rejoice- by the wingnut commentariat reveals how sick the politics of this country is. The left may have one Michael Moore. The right seems to have millions of him.

        • Uhhhh… no. It’s not good news. Deluded wingbats such as yourself have to convince yourself that people despairing and giving up looking for jobs is good news. The equivalent of June 1983 would be June 2011. Now did the Labor force participation rate go up after that?

        • Reagan was up against 21% interest rates and 10+% inflation, not 0% interest rates and 2% inflation. Reagan had a much tougher battle with a more hostile economic terrain. But it wasn’t long before he had the economy growing at 5-9% annual rate on a quarterly basis with jobs and incomes booming–not shrinking.

          Meanwhile,the incompetent messiah spent over $5 trillion taxpayer and we have NOTHING to show for it except the bill and 47 million monthly food stamps, record mortgage, foreclosures, record bankruptcies and record poverty levels .

          And he wants 4 more years? What in the past 4 years did you like the most and what of which, in a very improbable event, do you want to see more?

          I like the sound effects, Einstein…uhhm seems to be your best “non-cut and paste” contribution.

  4. To make a fair comparison, you might have bothered to mention that during the the Reagan administration government employment grew by 1.4M. Since beginning of Obama administration we’ve cut 0.7M government jobs. Maybe if we hadn’t blown out the deficit by putting two wars on the country’s credit card we wouldn’t have needed to put so many people out of work.

    • For the first two years in office Obama got whatever he wanted he had not only the house which requires a simple majority, but a filibuster proof senate for his first year. You have to be on drugs or totally naive to believe he GOP congress is at fault.

    • I love how liberals, in defense of Keynesian intervention in the economy, point to World War II as the great example of how you spend your way out of a depression, but then say that the Iraq/Afghanistan excursions were a drag on the economy.

      Liberal economist idol Paul Krugman even said that what the economy needed was an invasion of Martians because then we’d stop wringing our hands about government spending!

      Newsflash, folks, you can’t have it both ways!

  5. The only difference that I can see here is that Reagan didn’t have an obstructionist republican congress pledging from day one to make him a one term president, refusing at every turn to work with him or pass the jobs bill that would have supported the construction sector of the economy and launching more filibusters in the history of the senate. Hmmm…I totally agree, absolutely NO COMPARISON.

    • Obstructionist you say? Isn’t there a remote possibility that opposition was based on the belief that Obama’s policies were considered just plain wrong, wasteful, and ultimately ineffectual? Obama got his stimulus bill passed for all his “shovel-ready” projects, no? And just how much of that $ went to said projects?

    • Big-boy presidents Reagan and Clinton, who had both the house and senate against them, somehow managed to put together huge economic growth. This president has not. If you cannot run on your record, attack. Divide, distract, deceive. But do not talk about your record.

  6. One more thing…exactly WHO are these millions of people that have quick looking for work? Maybe when applying this logic to the news about the job numbers…how about qualifying that statement with some reasonable explanation as to how these “non job seekers” are living without food, water and shelter. If you have capable workers who are unemployed with a need to pay for a roof over their head and food in their bellies…trust me, they are looking for work.

    • Simple: I’m in that boat. I have to depend on a small military pension, and cut my expenses to the bone. The wife (if I had one and she had a job) would be another way to stay alive. At one point, I had to move back in with the parents (I only stayed 2 months, until I secured a fulltime job), during which I was working part time.

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