Reclaiming Common Sense

The August Employment Situation Report, or Jobs Report, was released September 7th. The headline was that we added over 200,000 seasonally adjusted workers. There was some concern that the June and July data were revised lower with the release of this report. Those who are concerned forgot that the June data was revised higher with the release of the July Jobs Report. The article  "August Jobs Report: Workers Up, Participation Down" was a fairly good end of the Summer Jobs Report. We added more non-seasonally adjusted (NSA) Current Employment Statistics (CES) workers during this August than August of 2015, August 2016, or August 2017. Participation fell during August because the Current Population Survey (CPS) data recorded one of the largest drops in unemployment ever recorded since 1980 and the largest drop in combined full-time and part-time jobs. The two surveys measure different things.

The CES data is the Establishment data and the CPS data is the Household data.  Workers versus Jobs. The CES data also measure wages. The article "August Wages and Workers Jump" detailed how total earnings, wages times workers, jumped by over 5%. All sectors have added workers since August 2010. That said, three sectors are still not back to August 2007 levels of workers. The four fastest growing sectors this year are  Mining/Logging, Construction, Professional Business Services and Manufacturing. These are the "dirty fingernail jobs" that encourage growth in other sectors. The "powers that be" were predicting doom and gloom after the 2016 Presidential election. Former President Obama took no responsibility for the first year during his Presidency and is now taking credit for the first two years of President Trump's Presidency. How is President Trump doing after 19 months as compared with his predecessors?

President Trump has added 6.9 million full-time jobs. This number is different from what you may read elsewhere because other quote the seasonally adjusted CES worker data as the "jobs data," and because this is the cumulative job creation since the first Jobs Report of each President, the first February of their term. It is also important to note that there has been a drop in both unemployment and part-time jobs under President Trump. Note that there have been more jobs created than the workforce population has grown. It is very important to notice that the workforce population has grown by 4.0 million potential workers under President Trump.

Former President Obama oversaw the loss of 517,000 total jobs and 1.3 million more unemployed workers. President trump trimmed unemployment by 1.8 million unemployed workers and President Obama added 1.3 million to the unemployment ranks. If you examine the article "Four Presidents at 96 months" then you will find that it took until the Spring of 2012 for former President Obama to recover all the jobs that were lost under his watch, and that when he left office during January 2017 that there were fewer full-time jobs than at the peak of the pre-recession job market during July 2007.

Former President Bush "43" was only doing slightly better than former President Obama after 19 months in office. President Bush had overseen the increase of 2.5 million full-time jobs and the trimming of 1.4 million part-time jobs. The problem is that the unemployment level was up 1.6 million. 1.1 million new net jobs for 4.0 million workers means that the participation rate dropped.

Former President Clinton had the strongest first 19 months in office. The former President added more jobs total than President Trump, and added those jobs to a smaller workforce. Participation was rising. President Clinton added nearly 6.8 million full-time jobs abs another 675,000 part-time jobs. His population only grew by 3.1 million workers. Again, if you examine the "Four Presidents at 96 months article" you will find that his population "spiked" during January 2000, The population data is revised every January. The population data was revised down during January 2017, giving former President Obama a "going away" present of a slight boost to his participation rate. President Trump received a "Happy Anniversary" present of a boost to his workforce population which dragged down his participation rate.

Former President Reagan added 3.1 million full-time jobs for 3.1 million new workers. The growth in participation that former President Clinton saw started under former President Reagan. Both records for job creation were substantial. Clinton added 19.1 million jobs for 20 million workers. Reagan added 17.4 million jobs for 16.5 million workers. President Reagan also saw a jump in unemployed workers after 19 months in office.

Why is it that former Presidents Reagan, George W Bush, and Obama saw spikes in unemployment through the first 19 months in office? The simple answer is that Presidential Parties normally change when the economy is slowing or receding. President Reagan took over from President Carter during the start of his first recession. President Bush took over from President Clinton just around the time of the "Dot Com" Crash. President Obama took over after the Housing Recession/Jobs Recession/Retail Recession/Wage recession. President Trump took over from President Obama as the economy was slowing, job growth was slowing, and participation was dropping. A more  complicated answer is that Presidents Clinton and Trump had to deal with, or is having to deal with, tensions in the House and Senate. President Clinton started with a strong majority in both the House and the Senate. President Trump started with a slight advantage in the Senate and a strong advantage in the House. President Obama had a veto-proof majority in the House and the Senate when President Obama took office. Reagan only wished that he a majority in the House. Could it be that both Presidents Clinton and Trump were focused on lifting people up off of welfare? President Clinton co-opted former Governor Tommy Thompson's "workfare" program. President "What do you have to lose" Trump has succeeded in reducing the unemployment rate and improving the minority jobs numbers.

Why is it that President Trump and President George W. Bush were "able" to add 4 million workers to the workforce population during their first 19 months in office? Why did President Obama only add 3.4 million potential workers and President Clinton only add 3.1 million potential workers? Part pf the answer is the size of the workforce when they took office. Part of the answer is economic optimism. Part of the answer may be that the population change may be arbitrary.

Jobs are trending higher. Unemployment is trending lower. Unemployment should fall during the September and October jobs reports. There is still more data to crunch for this month. How are men doing with their recovery? How are women doing with their expansion? How are the teen and early 20s workers faring as they go back to school? Are seniors able to retire? Multiple job workers fell this month. Will they rise through the end of the year? So much data.

It's the economy.