A little update on jobs throughout the U.S. I thought I’d share three important job charts I’ve seen around the internet. They explain some rather important facts as an important election year begins.
1. Washington Monthly, on December 8th, published a chart on the total unemployment claims by week. The author helpfully places a small “arrow” to let viewers know when Obama’s economic stimulus went into play. I am not going to say that this chart is dispositive evidence; but, it sure is not evidence that he has destroyed jobs as some commentators and politicians have suggested.
2. Most readers, especially economic-topic readers, prefer statistical imagery over written numbers. Here is the second chart provided by the research department at the Federal Reserve in St. Louis:
Color me skeptical, but I just don’t believe all this hype about Obama being bad for the economy! There is a book written by Robert Skidelsky, “The Return of the Master.” Perhaps, the man that book was written about was on to something? I humbly suggest any of my readers, who have some downtime, add it to their library, Nook, or Kindle.
Nonetheless, one will notice that the stimulus took a rather long time to have a positive effect on the economy. Economists tend to expect gains from fiscal policy much faster than monetary policy. In fact, we saw faster (but short lived) effects from the Fed’s novel monetary bond movements in 2010 than we did from the stimulus. I’d like to posit that the answer to that one is one of deficits. No, not one of budget deficits.But rather, one of trade deficits. Those who blame Keynesian theory on our “debt” problems might be surprised to know that Keynes was very much against trade deficits. Why? Well, Keynes believed that a positive trade balance (provided it is not too large like China’s) was a natural stimulus, while an unfavorable one would produce a persistent depression. We are stimulating a situation that IS or is headed towards “persistent depression.” Of course, it is simple to state the issue. It is much harder to fix something like the U.S. trade deficit.
3. One last chart for those who have focused on the job loss prior to Obama entering office. While it’s still debated by major economists how much a President affects the economy versus actual legislation, let’s assume for a moment a President does have a strong effect. The next chart then, shows that President Obama was quicker to stop a significantly stronger “job wound” then his predecessor President Bush. As Obama entered office, the trend (in graph 2) in the economy was to lose about 5 million jobs per year. As the year goes on, the slope of the line becomes less steep and “only” another 4 million jobs are lost. However, that was the end of aggregate job loss. One year later, the economy regained a little under 3 million of those jobs. Meanwhile, in 2001 soon after the tech crash the economy over a three-year span lost just under 2.5 million jobs. This job loss occurred even during two factors that are believed to lead to economic stimulus: (1) an enormous tax cut that was pushed by then President Bush and (2) 1.5 wars (to be fair the Iraq war only started in 2003).
By numbers alone, we see that it took one year to stop job loss and second year to regain 3 million of those jobs under the Obama administration. That administration used a stimulus package and ended one war and drew down a second. Again, this isn’t dispositive that Presidents, and specifically Obama, can affect the economy for the better. However, it sure calls into question the claims by some commentators that Obama has hurt the economy. It also significantly hampers the legitimacy of President-nominee hopeful Mitt Romney calling President Obama a “job destroyer.”