Friday’s Unemployment Data & Three Levels Of RomneyConomic Bunkum
I’ll use these charts to attack the baseless “foundation” of Romney’s quote above, a quote, by the way, that follows this morning’s Bureau of Labor Statistics (BLS) September 2012 unemployment rate release which showed continuing economic improvement. The economy is recovering and employment now seems poised to rebound in a more consistent manner, although I believe far more than most that strong and dangerous headwinds blowing in from economic weakness in the United Kingdom, Europe, and China may derail us all.
Let’s put that little nightmare aside for the moment and concentrate on our domestic h=nightmare, Mitt Romney. Here we go!
1. Past as prologue: January 1990 to December 2007. After folks pick apart the most recent unemployment report – or any important government report – one has to fight the temptation believe the just released monthly data is a “trend.” It’s not, today’s BLS report was what’s called a “snapshot,” important but not worthy of either mania or depression. If, though, a new monthly report reinforces or confirms a consistent monthly trend many months in the making, well, that’s worth noting, and studying.
So, unlike Mitt and Paul, let’s look at the trend in unemployment and some other related data to see just how misleading, inaccurate, and untruthful Romney’s comments are (a trifecta!).
Comments follow the chart below. The left scale indicates the unemployment rate; the right scale shows the mean duration of unemployment in weeks (not in percent), and is indexed in weeks that indicate the change from the previous year.
- It’s pretty clear that the unemployment rate employment following the first two recessions in the period July 1990 to November 2001 continued to move higher after the end of these recessions,
- Also, the rate stayed high for long periods of time before it began to fall, the first recession ended in March 1991 and employment didn’t begin to recover for nearly two years; the second recession ended in November 2001, and there was no consistent decline in unemployment for nearly three years;
- The unemployment rate did not improve to pre-recession levels for six years in the recession that began in 1991 under President H.W. Bush. Moreover, under Bush II, the unemployment rate did not return to the sub-four percent level at the end of Clinton’s presidency. In fact, it has not seen that level since the last days of the Clinton era. That’s how bad the Lesser Depression has been.
- Finally, the increases you see in the mean number of weeks of unemployment between 2001 and 2009 unsurprisingly spikes before the decline in the unemployment rate until the economy begins to fall into recession.
2. Obama administration 2009 to October 2012: Next chart, comments follow below it. Again, the left scale indicates the unemployment rate; the right scale shows the mean duration of unemployment in weeks (not in percent), and is indexed in weeks that indicate the change from the previous year.
Now let’s look at the portion of the chart that begins with the Obama administration. Prior to his term, unemployment had grown nearly exponentially throughout 2008, from 5% to nearly 10%. That growth rate for a few months more would’ve put unemployment at around 150%. . .
- Note, however, what occurred when the stimulus plan began to kick in: a steep, though bumpy, unemployment decline from 10% to 7.8% as reported today by the Bureau of Labor Statistics. The first term increase in employment is 22%. Notice Bush II’s first recession. Employment increased by 15% at the end of his first term, and that 2001 recession, while severe, was far less severe than the present one and was a different, more vicious species altogether.
- Also, unlike the previous two recessions illustrated in the chart, the unemployment rate fell nearly from the beginning of the Obama administration’s stimulus shot. (Oh, I forgot, government stimulus does not create jobs. . . ) Again, to date, a 22% drop in the unemployment rate from 10% to 7.8%.
- Most importantly, since as we’ve seen the mean number of weeks of unemployment leads (occurs before, or prior to) improvements in overall employment, progress under the Obama administration has been simply astounding. The mean duration of unemployment has dropped to pre-recession levels despite a minimal uptick in September 2012. Coupled with this overall decline in Obama’s first term the most recent trend in these duration numbers is straight down (again, despite the mild September 2012 uptick). If the past is prologue and this remains a leading indicator of improved employment numbers, then a burst of new hiring might be in the offing, if Europe and other U.S. export markets get their economies on track.
- Finally, Using the Federal Reserve’s and Bureau of Labor Statistic’s data on those unemployed for more than 15 weeks, check out the historical record since 1990 and the Obama first term record. I set up the chart to show the change from the previous year in the number of 15+ week unemployed. Under Obama that number dropped from (+)2 million to (-)1.5 million, a plummet, I think its called.
And, of course, it’s a godsend to those individuals and families who have been hit the hardest in the Lesser Depression. Yes, to be sure, real wages have not improved much in the past decades for the majority of the workforce, but at a minimum the Obama administration has gotten people back to work, and despite the constant anti-stimulus harangue of the Republican party, Keynes was, again, right.
3. Manufacturing Jobs: “. . .we’ve lost over 600,000 manufacturing jobs since President Obama took office.” Have a look at the chart below, Federal Reserve and BLS data. Do you see 600,000 manufacturing job losses. If you do you’re holding the chart upside down and looking at it in a mirror. Maybe that explains Romneyconomics.
Sure, there has been a net job loss in manufacturing during President Obama’s first term, approximately 130,000. But it’s easy to see how Romney’s figure is (1) wrong, and (2) equal parts misleading and balderdash.
- If we were to blame anyone for the manufacturing sector’s collapse it would be George W. Bush who in both good and bad times oversaw net manufacturing job losses of nearly 5,000,000 jobs. Five million.
- President Obama walked into a manufacturing swoon dive of unprecedented proportions which explains the pre-2010 losses of 850,000 more jobs. The administration started in the sub-basement.
- Yet – what a surprise! – after the auto industry assistance plan began to yield results, manufacturing sector jobs rebounded strongly and have trended higher consistently since then.
President Obama fought fierce GOP headwinds to accomplish a manufacturing sector rescue. Imagine how much further along we’d be if they had cooperated even a small amount. . .
So, as he did in the debate (see above sidebar), and, frankly, since he first opened his mouth in the GOP primaries, Mitt tosses out data like we’re all halfwits who cannot read or fact check. Surely, all “data” is limited in its accuracy; the Federal Reserve and the Bureau of Labor Statistics are not exempt. Nonetheless, the Romney campaign tosses out nonsense as if it were rice at a wedding.
Our President’s economic team has done what I believe will be ultimately recorded as a nation-saving job of keeping the country depression-free despite the strongest resistance every mounted by a small cadre of House and Senate Republicans since the Civil War. And that’s an achievement worthy of a second term.