When the latest monthly numbers on job creation came out on Sept. 7, the candidates for president went into spin mode full tilt. President Obama touted that "business once again added jobs for the 30th month in a row," while Republican Mitt Romney said the 95,000 people who found jobs in August were outnumbered by nearly 400,000 people who dropped out of the labor force, apparently in discouragement.
With only about six weeks before the election, their sparring over the state of the economy points to a question that both campaigns know is on the minds of undecided voters: Does Mr. Obama have a solid track record on jobs, or have key policy efforts of the past four years failed?
The evidence, viewed through the lens of history and expert analysis, arguably points to a presidency that helped to jump-start a rebound from deep recession – but that perhaps could have achieved more to bring down unemployment.
At the outset, though, it's important to note that the economy is in many ways outside the direct control of any president. Government policies are just one of many forces that influence the economy for better or worse. At the same time, many economists say federal policies – by Obama, President Bush, Congress, and the Federal Reserve – have played an unusually important role in the economy over the past five years or so, since the financial crisis began.
Some of the important facts:
- Obama is correct when he says that in the past 30 months, private-sector employers have created about 4.6 million net jobs, according to tallies by the Bureau of Labor Statistics. Since the public sector has been cutting jobs during that time, the nation as a whole has added about 4 million jobs, which works out to about 135,000 per month. The most recent months have been a bit below that average.
- Since January 2009, when Obama took office, the job tally is essentially flat – down by 261,000 actually. This number indicates the sharp contrast between the most recent 30 months and economy's performance in early 2009, when the recession and financial crisis were still destroying jobs at a furious pace.
- Historically, recoveries from recession have generally been faster than this one. The chart in the upper left hand corner of this article shows Labor Department data in a chart from the Federal Reserve Bank of Minneapolis. (The link is here for those who want to explore the interactive charts more fully.) Setting aside the question of how deep the recession was, the current recovery (shown in red) looks tepid compared with three of the four recent recoveries shown for comparison. Note that in all the economic expansions that began since 1990 have started out "jobless," with many months of stagnant or declining jobs even as the economy had begun to grow again.
- Data tracked by the Minneapolis Fed also show that, so far, the US has regained only about half the net job losses that occurred because of the recession. This is the only time in data going back to 1948 that jobs haven't fully recovered by this time in a cycle.
- Former Massachusetts Governor Romney is correct that many people have dropped out of the labor force. Since the end of 2008, the civilian noninstitutional population over age 16 has grown by some 8.5 million people, but the labor force (those working or actively seeking work) has shown essentially no net growth.
Even Obama concedes that the job market has been disappointing.
His big speech at the Democratic National Convention was partly a plea to Americans to have patience. Republicans, of course, argue that the tepid jobs market means it's time for voters to give someone else the keys to the policy wheel.
One important bit of context as this debate continues: The recession that began in 2007 was in many ways more damaging than any other since the Great Depression. And in the 1930s, the pace of the jobs recovery may not have been much different from today.
The tracking of economic data back then wasn't as precise as today. The Labor Department databases don't even go back before World War II. But some estimates conclude that about four years after unemployment peaked in 1933, the jobless rate still stood above 14 percent. The message is that recovery tends to be slower after major financial upheavals.
Many economists say Obama might have done better to guide a recovery, but they have differing prescriptions for what he should have done. And many say the economy would be in deeper trouble today had he done nothing at all.
By his reckoning, unemployment would still be higher than 10 percent if policymakers hadn't taken steps such as aiding a bankruptcy reorganization of General Motors and Chrysler, supporting tottering banks, and providing a 2009 stimulus package that included a mix of government spending and tax cuts.
"I wouldn't have done the financial system [rescue] exactly the way they did it," Mr. Atkinson says. But "that obviously helped."
Similarly, he says that as unpopular as the auto bailout was with many Americans, "there's no question the US economy would be worse off" if GM and Chrysler had failed, dragging dealerships and parts suppliers with them.
Atkinson is in the camp of economists who are skeptical that more stimulus efforts are the answer to today's job woes. But he says that at the height of the crisis a major stimulus package made sense.
A poll of dozens of academic economists this February, sponsored by the University of Chicago's Booth School, found 80 percent agreeing with the view that unemployment rate was lower by the end of 2010 than it would have been without the $787 billion Recovery Act that Obama pushed for. Four percent of respondents disagreed.
Critics say Obama and his administration could have done many things better. Even supporters of the stimulus quibble with its design. Many conservatives say the president became carried away with a liberal agenda on everything from the environment to labor unions, rather than focusing on bipartisan efforts to create jobs in areas such as fossil-fuel production and manufacturing.
Obama's defenders say he could have done more for the economy if Republicans hadn't resisted many of his proposals.
Many policy analysts say both sides share blame for their failure to strike better compromises on fiscal policy – how to reform the tax code and curb the rise of the national debt over time. A partisan standoff last year over the nation's debt limit, for example, became a serious setback for consumer confidence.