Category Archives: 2008 to sometime recession

Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama


By request, here is another update of an earlier post through the August employment report.
NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I’ll just stick to the beginning of each term.
Note: We frequently use Presidential terms as time markers – we could use Speaker of the House, or any other marker.
Important: There are many differences between these periods. Overall employment was smaller in the ’80s, however the participation rate was increasing in the ’80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.
First, here is a table for private sector jobs. The top two private sector terms were both under President Clinton.  Reagan’s 2nd term saw about the same job growth as during Carter’s term.  Note: There was a severe recession at the beginning of Reagan’s first term (when Volcker raised rates to slow inflation) and a recession near the end of Carter’s term (gas prices increased sharply and there was an oil embargo).

Private Sector
Jobs Added (000s)


Reagan 1

Reagan 2

GHW Bush

Clinton 1

Clinton 2

GW Bush 1

GW Bush 2

Obama 1

Obama 2

131 months into 2nd term: 10,648 pace.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). President George H.W. Bush only served one term, and President Obama is in the third year of his second term.
Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early ’80s right after Mr. Reagan (yellow) took office.
There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.
Private Sector Payrolls Click on graph for larger image.
The first graph is for private employment only.
The employment recovery during Mr. G.W. Bush’s (red) first term was sluggish, and private employment was down 844,000 jobs at the end of his first term.   At the end of Mr. Bush’s second term, private employment was collapsing, and there were net 463,000 private sector jobs lost during Mr. Bush’s two terms. 
Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.
Private sector employment increased by 20,955,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).
There were only 2,018,000 more private sector jobs at the end of Mr. Obama’s first term.  Thirty one months into Mr. Obama’s second term, there are now 8,895,000 more private sector jobs than when he initially took office.
Public Sector Payrolls A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. 
The public sector grew during Mr. Carter’s term (up 1,304,000), during Mr. Reagan’s terms (up 1,414,000), during Mr. G.H.W. Bush’s term (up 1,127,000), during Mr. Clinton’s terms (up 1,934,000), and during Mr. G.W. Bush’s terms (up 1,744,000 jobs).
However the public sector has declined significantly since Mr. Obama took office (down 584,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level.  This has been a significant drag on overall employment.
And a table for public sector jobs. Public sector jobs declined the most during Obama’s first term, and increased the most during Reagan’s 2nd term.

Public Sector
Jobs Added (000s)


Reagan 1

Reagan 2

GHW Bush

Clinton 1

Clinton 2

GW Bush 1

GW Bush 2

Obama 1

Obama 2

131 months into 2nd term, 183 pace

Looking forward, I expect the economy to continue to expand through 2016 (at least), so I don’t expect a sharp decline in private employment as happened at the end of Mr. Bush’s 2nd term (In 2005 and 2006 I was warning of a coming recession due to the bursting of the housing bubble).
For the public sector, the cutbacks are clearly over at the state and local levels, and it appears cutbacks at the Federal level might also be over.  Right now I’m expecting some increase in public employment during Obama’s 2nd term, but nothing like what happened during Reagan’s second term.
Below is a table of the top three presidential terms for private job creation (they also happen to be the three best terms for total non-farm job creation).
Clinton’s two terms were the best for both private and total non-farm job creation, followed by Reagan’s 2nd term.
Currently Obama’s 2nd term is on pace to be the 2nd best ever for private job creation.  However, with very few public sector jobs added, Obama’s 2nd term is only on pace to be the third best for total job creation.
Note: Only 118 thousand public sector jobs have been added during the first thirty one months of Obama’s 2nd term (following a record loss of 702 thousand public sector jobs during Obama’s 1st term).  This is less than 10% of the public sector jobs added during Reagan’s 2nd term!

Top Employment Gains per Presidential Terms (000s)

Total Non-Farm

Clinton 1

Clinton 2

Reagan 2

Obama 21


131 Months into 2nd Term
2Current Pace for Obama’s 2nd Term

The last table shows the jobs needed per month for Obama’s 2nd term to be in the top three presidential terms.

Average Jobs needed per month (000s)
for remainder of Obama’s 2nd Term

to Rank




Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama
Bill McBride
Fri, 04 Sep 2015 18:02:00 GMT


How Obama Is Caught Between Economic Growth and Shrinking Incomes


In President Barack Obama‘s big speech on the economy Thursday, the president touted his party’s economic agenda and repeated a claim similar to one he’s made before: “It is indisputable that our economy is stronger today than it was when I took office.”

Then he added, “It is also indisputable that millions of Americans don’t yet feel enough of the benefits of a growing economy where it matters most — in their own lives.”

Behind Mr. Obama’s frustration: A striking divergence between the growing economy and the share of that growth going as income to the median American household.

In the economic expansions of the 1980s and 1990s, roughly coinciding with the presidencies of Ronald Reagan and Bill Clinton, the amount of gross domestic product for each person in the economy, or GDP per capita (red in all the charts), was growing. And the median household income — the earnings of the middle household (blue in all the charts) — was also growing.

Income inequality surely existed in the ’80s and ’90s, but the pie available was growing and Americans in the middle were getting a piece of it. Then incomes slid during the 2001 recession at the beginning of George W. Bush‘s presidency and never quite recovered, even as GDP per capita continued to grow. The recession that began in December 2007 sent both measures falling.

Since Mr. Obama took office, GDP per capita has reclaimed its lost ground. But these gains have not accrued to the median household.

A look at the year over year change shows the breakdown. In the 1980s and 1990s, median incomes and GDP per capita both rose. But beginning around the year 2000, per capita GDP has posted a number of solid years, while median household income has had few years of positive growth.

In 2013, median household income climbed for the first time since 2007, but by only a tiny bit — less than $200.

Since 1999, this has opened a widening gyre between the two measures. GDP per capita has risen, while median incomes have fallen. Mr. Obama would like credit for the recovery of the former. But it’s the stagnation of the latter that has left so many households dissatisfied.

How Obama Is Caught Between Economic Growth and Shrinking Incomes
Josh Zumbrun
Fri, 03 Oct 2014 12:00:08 GMT

Reconciling Hayek’s and Keynes’ views of recessions


Paul Beaudry, Dana Galizia, 1 June 2014
The views of Hayek and Keynes about the causes and consequences of recessions are often presented as opposing. According to Hayek, recessions are working out excessive investments, whereas Keynes regarded them as demand shortages. This column argues that these perspectives are not mutually exclusive. Recessions may reflect periods of liquidation but this could be associated with inefficient adjustment involving unemployment and precautionary savings. Stimulative policy may be desirable even if it delays the full recovery.
Full Article: Reconciling Hayek’s and Keynes’ views of recessions

Reconciling Hayek’s and Keynes’ views of recessions
Sun, 01 Jun 2014 00:00:00 GMT

Only About One-Third of Labor Force Dropouts Will Return


Millions of people have dropped out of the labor force since the start of the recession in late 2007, and only about a third of them will come back in the years ahead when the economy is stronger, the CBO said in a new report.

Only About One-Third of Labor Force Dropouts Will Return
Victoria McGrane
Tue, 04 Feb 2014 23:49:25 GMT

Reinhart and Rogoff: Great Recession may “surpass in severity”; the Great Depression in many Countries


A new paper from Reinhart and Rogoff: Recovery from Financial Crisis: Evidence from 100 Episodes. Excerpt:

Examining the evolution of real per capita GDP around 100 systemic banking crises reveals that a significant part of the costs of these crises lies in the protracted and halting nature of the recovery. On average it takes about eight years to reach the pre-crisis level of income; the median is about 6 ½ years. Five to six years after the onset of the current crisis only Germany and the US (out of 12 systemic crisis cases) have reached their 2007-2008 peaks in per capita income. In a sample that covers 63 crises in advanced economies and 37 in larger emerging markets, more than forty percent of the post-crisis episodes experienced double dips. The analysis summarized here adds another dimension to an observation we have been emphasizing on the basis of our earlier work—namely, that the subprime crisis is not an anomaly in the context of the pre-WWII era. Postwar business cycles are not the right comparator for the severe crises that have swept advanced economies in recent years.

Even after one of the most severe multi-year crises on record in the advanced economies, the received wisdom in policy circles clings to the notion that high-income countries are completely different from their emerging-market counterparts. The current phase of the official policy approach is predicated on the assumption that growth, financial stability and debt sustainability can be achieved through a mix of austerity and forbearance (and some reform). The claim is that advanced countries do not need to resort to the more eclectic policies of emerging markets, including debt restructurings and conversions, higher inflation, capital controls and other forms of financial repression. Now entering the sixth or seventh year (depending on the country) of crisis, output remains well below its pre-crisis peak in ten of the twelve crisis countries. The gap with potential output is even greater. Delays in accepting that desperate times call for desperate measures keeps raising the odds that, as documented here, this crisis may in the end surpass in severity the depression of the 1930s in a large number of countries.
emphasis added

The policies of austerity in Europe have failed miserably and many countries there are experiencing a worse slump than during the Depression (austerity in the US has held back the recovery too, but at least there was a little stimulus in 2009, and monetary policy was accommodative). As Reinhart and Rogoff note, higher inflation in Europe (and the US) would help.

Reinhart and Rogoff: Great Recession may “surpass in severity” the Great Depression in many Countries
Bill McBride
Fri, 31 Jan 2014 22:21:00 GMT

Robert J. Shiller asks why innovative ideas to prevent another financial crisis have gained no political or media traction. – Project Syndicate


Robert J. Shiller asks why innovative ideas to prevent another financial crisis have gained no political or media traction. – Project Syndicate

Robert J. Shiller asks why innovative ideas to prevent another financial crisis have gained no political or media traction. – Project Syndicate
Thu, 16 Jan 2014 01:07:39 GMT

GRAPHIC: Unemployment Falls to 6.7 Percent Due to Workers Leaving the Labor Force


January 10, 2014

The headline unemployment rate fell sharply to 6.7 percent in December. The drop of 0.3 percentage points was almost entirely due to people leaving the labor force as the number of people reported employed in December only rose by 143,000. This was just enough to keep the employment-to-population ratio constant. The establishment survey was also surprisingly weak, showing a gain of just 74,000 jobs. In addition, the length of the average workweek fell by 0.1 hour leading to a decline of 0.3 percent in the index of weekly hours for the month.


For more, read the latest Jobs Byte.

GRAPHIC: Unemployment Falls to 6.7 Percent Due to Workers Leaving the Labor Force
Fri, 10 Jan 2014 15:06:14 GMT

Caught with his “pants down”!


One of the Federal Reserve‘s biggest inflation fighters confessed Friday he’s been caught off guard when he sees how calm price pressures have been in the face of epic levels of central bank stimulus.

Speaking in Philadelphia, Federal Reserve Bank of Richmond President Jeffrey Lacker said, “I have been surprised by the stability of inflation and inflation expectations.

Mr. Lacker has been a persistent critic of central bank efforts to drive up growth and lower unemployment via rock bottom interest rates and campaigns of bond buying. One of his most persistent concerns has been that Fed actions will drive up price pressure to levels considered unacceptable to the central bank. To that end, Mr. Lacker was a dissenter at monetary-policy-setting Federal Open Market Committee meetings when he last held a voting role in 2012.

But he shouldn´t, being a central banker and all. The charts show the behavior of two measures of inflation expectations (10year) and the Fed´s preferred inflation indicator, the PCE-Core.

Pants down_1

The following charts show what was going on with broad money supply growth (Divisia M3), NGDP and velocity growth. Note that in 2007, with the first indications of financial troubles, velocity falls (money demand increases). Money supply growth increased, offsetting the increase in money demand, with the result that NGDP growth was kept relatively steady

In early 2008, with velocity falling (negative growth) money supply growth falls strongly. The result could only be the steep fall in NGDP growth.

With QE1 velocity rises, more than offsetting the continued fall in money supply, so NGDP growth climbs. More recently, the fall in velocity is not adequately offset by an increase in money supply growth, so that NGDP growth falls back below 4%.

Pants down_2

In short,Jeffrey Lacker´s (and more generally the Fed´s) inflationphobia has been misplaced all along. The costs have been staggering!

Caught with his “pants down”!
Marcus Nunes
Sat, 02 Nov 2013 17:58:55 GMT

2.8 Million Construction Jobs Are Missing


In Saturday’s Wall Street Journal Timothy Aeppel wrote an interesting article noting that manufacturing employment has recovered only 22% of the nearly 2.3 million jobs lost during the 2008-2009 recession.  While this is true the U.S. economy and labor market can flourish despite declining manufacturing employment.  In fact, declining manufacturing employment has been the norm in the U.S. for decades.  Manufacturing employment peaked at 19.5 million jobs in 1979.  Since then the manufacturing sector has lost 7.5 million jobs as 53 million jobs were created outside the manufacturing sector.

The decline in construction employment over the past five and a half years, however, is troubling and atypical of recent economic recoveries.  Normally investment in residential housing by households and structures by businesses increases rapidly in recoveries as these investments were deferred and delayed during the recession.  A comparison of the pattern of construction employment in this recession and recovery to comparable periods during and after the 1981 and 2001 recessions reveals some clear patterns:

  • Construction employment declined more than three times as much (26%) during the 2008-2009 recession as it did during the 1981 recession and more than 11 times as much as during the 2001 recession.
  • Construction employment is about 1.7 million (22%) below its pre-recession peak five and one half years after the recession began.
  • Five and one half years after the beginning of the 1981 and 2001 recessions construction employment had increased to about 15% above its pre-recession peak.

The following chart compares construction employment across the 1981, 2001 and 2008-2009 recessions normalizing employment to be 100 at the start of each recession.  The chart tracks construction employment in each recession/recovery for the subsequent five and one half years.


The magnitude of the decline in construction employment during the 2008-2009 recession was unprecedented.  The absence of a recovery in construction in employment during the subsequent recovery is also unprecedented.  Had construction employment rebounded over the past few years as it had in previous recoveries, there would be 8.6 million workers in the construction sector instead of the current total of 5.8 million construction employees.  The net difference represents a shortfall of 2.8 million jobs in the construction sector.  Construction employment remains well below the levels of six years ago because businesses are investing less in structures than they did in previous recoveries and the residential housing market has not recovered as strongly as it has in other recoveries.

The shortfall of 2.8 million construction jobs is equivalent to the difference between the current unemployment rate of 7.4% and a 5.6% rate.  Of course, if the economy were strong enough to generate an additional 2.8 million construction jobs there would also be more robust growth in income and employment in other sectors of the economy lowering the unemployment rate even further.

The sharp decline in employment in the construction sector since 2008 and the fact that only 8% of construction jobs have been regained during this economic recovery is extremely troubling.  Construction differs from manufacturing because jobs can’t easily be outsourced to foreign countries.  While manufacturing’s share of total employment has declined steadily for decades, construction’s share of total employment grew steadily for three decades from 1978 to 2008 until the sharp decline over the past five and one half years.  The following chart illustrates the sharp drop in construction employment since 2008.


In my view the continued weakness in the construction sector underscores a failed opportunity for those who advocate public investment in infrastructure.  The past five and one half years have seen an unprecedented slowdown in construction activity and employment.  Over two million construction workers lost their jobs in the deep recession and have remained displaced through a tepid recovery.  At the same time we have not chosen to re-build and repair our roads, bridges and infrastructure while there is an excess supply of construction labor and interest rates are low.  Government expenditures have been diverted from infrastructure to other programs such as a record extension of unemployment insurance benefits (over one billion weeks worth of UI benefits have been paid since 2008).

More importantly, the fact that the recession officially ended four years ago yet construction employment remains in a slump is a clear indication of the weakness of this economic recovery.  As the recovery officially enters its fifth year households are still unwilling or unable to purchase new houses and businesses lack the confidence and demand for their products to invest in offices, factories, warehouses and other facilities.  Until the construction sector rebounds because households and businesses are willing and able to invest in structures this recovery will continue to disappoint.

2.8 Million Construction Jobs Are Missing
Stephen Bronars
Mon, 26 Aug 2013 15:53:45 GMT

A tale of two business cycles: 1981-86 & 2007-13


A friend and reader wrote to me:

You may already have done this, but if not, I desperately need a visual way to show people what a V-shaped recession looks like in terms of the L-shaped depression/recession we’re in.

And I sent her the panel below. I hope she finds it useful!

Tale of two cycles

A tale of two business cycles: 1981-86 & 2007-13
Marcus Nunes
Sat, 04 May 2013 13:34:56 GMT