Employment Across the Presidents
We look at the employment adds/declines for each presidential term back to Nixon/Ford. Facts matter.
In a fact-lite world, we thought we would look at the employment deltas across the various Presidential administrations back to the early 1970s.
The more recent results are usually of most interest, but some historical context is useful relative to how Presidents get treated by history.
We look at total jobs added in each term with a few adjusted metrics such as Trump ex-2020 and Obama ex-2009.
We add in some % changes to give weight to the simple reality of expanding population as the baby boom shifted to the echo boom.
With the political smack-talking season upon us (seems like one endless season since 2016), economic metrics and performance (real and imagined) will dominate the dialogue.
In this commentary we look back at the employment trends across administrations. We start with Nixon II/Ford and run through Biden term-to-date.
As someone who remembers the Goldwater sign on the lawn in 1964 in a Democrat-heavy, working-class town followed by another election where one parent cast her 1968 vote with George Wallace (who won Alabama, Arkansas, Georgia, Louisiana, and Mississippi), the timeline and evolution of political toxicity brings some childhood nostalgia. Maybe there are too many common features since those were tense times in the world right down to domestic turmoil, a continuing Cold War, and the aftereffects of a disappointing and hot proxy war. We have all that and more today.
Employment is high on everyone’s list of economic priorities…
The chart above is a reminder that growing economies and growing populations come naturally with expanded payroll over time. There is a need to toggle between gross additions to nonfarm payroll and % increases in payroll to give better demographic context. 10 million job adds in the late 1970s means more than the same number in the 2020s.
We have already looked at some angles on economic performance including Debt % GDP trends (see US Debt % GDP: Raiders of the Lost Treasury 5-29-23) and GDP growth (see 1Q23 GDP: Facts Matter 6-29-23). The question of “Who did what when?” can be tied in part to objective metrics (GDP growth, deficit spending, inflation) but also should be followed up with the logical question of “Who had little or no control over what happened anyway?”
Some new Presidents on the list inherited rebounds after brutal downturns, and that fed an employment rebound. Some got caught in geopolitics and global upheaval (post-Vietnam inflation, oil embargoes, systemic bank crisis bringing credit contraction, deadly pandemics, etc.). Carter got a taste of multiple problems with inflation and oil shocks but running alongside a jobs bounce off the 4Q73-1Q75 recession. The main point is to consider the facts and reality of events across the cycles. Some real facts help when election year noise requires ear plugs.
We have laid out a lot of the events of past cycles when we were starting up Macro4Micro (see Expansion Checklist: Recoveries Lined Up by Height 10-10-22, Business Cycles: The Recession Dating Game 10-10-22, Inflation: Events ‘R’ Us Timeline 10-6-22). The history has relevance today, notably the post-2000 trends in a slower growth economy with more political division than we had seen in the 1960s.
The above chart is our main focus since it frames how many jobs were added in each administration. There are all kinds of representations made over time and history gets recreated in the interests of political sell jobs. Below we do a quick summary of the employment performance during these administrations.
Nixon II/Ford: Considering the inflation turmoil, oil embargo (4Q73/1Q74), and deep recession (4Q73 to 1Q75) the job count under Nixon II/Ford was impressive. The inflation fighting tools deployed by the Fed did not work in the end. Carter inherited a lot of problems but also a tailwind recovery as he took the reins after the 1976 election (my first Presidential vote).
Carter: With how often Carter gets derided for his single term in office and inflation legacy, his term saw 10.5 million jobs added totaling an impressive +13.0% increase in jobs. The +13% is the best on the list. When Volcker took the helm at the Fed in Aug 1979, he ran fed funds to 20% at a few points and kept fed funds materially above inflation for literally years into the early 1980s and the Reagan I term. The oil spike during the Iran conflict and aggressive monetary policy and soaring rates to fight inflation were the daggers in Carter’s chances for a second term.
Reagan I and Reagan II: During Reagan I, we saw a follow-through on a double-dip recession that started under Carter but with the economic pain peaking in Nov 1982. Job additions kept on rolling across his two terms as noted with Reagan II among the best economic performances in terms of jobs and GDP growth. The bull market of the 1980s was fueled by credit expansion in a rapidly growing corporate bond market (IG and HY as disintermediation of the banks ruled). Credit drives expansion (too much drives a bubble). The balance was getting stretched late in the second term. Reagan’s legacy is a good one and multi-tiered with almost 16 million jobs. The +11.2% increase in Reagan II is #2 on the list.
GHW Bush: George Bush, a WWII hero dive bombing pilot with all the intelligence background and patrician trappings, should have had a better story. The problem with booms is that busts often follow, and his unimpressive +2.6 million job adds and +2.4% increase was the lowest on the list before the year 2000. The Mideast War sent his approval soaring to 89 (Gallup), but the ensuing recession and a disruptive third-party candidate (Ross Perot) who grabbed almost 19% of the vote sent GHW Bush packing after a single term as Clinton won with 43% of the popular vote. Recessions matter, and the timing of recessions late in a term matter more. Sometimes the electorate knows about the recession before NBER makes the call (see Business Cycles: The Recession Dating Game 10-10-22.)
Clinton I and Clinton II: Clinton oversaw the second decade of bull markets that also saw a boom (and bubble in tech). As with Reagan, Clinton rode a new wave of private sector credit creation as banking was deregulated and the bank and brokerage convergence was completed. Credit creation was driven by major US brokerage players and Non-US banks that descended upon the US opportunities in credit products. We see more than 11 million jobs added in each term for a total of over 23 million. That record stands for two terms. We saw +10.6% additions in jobs during Clinton I and +9.6% in Clinton II. When talking about greatest economies in recent rhetoric, no one after the year 2000 is in the same zip code as Reagan and Clinton. Not even the same time zone.
GW Bush I and GW Bush II: GW Bush eclipsed his father’s 89 Gallup ratings with a 90 (highest ever) after 9/11. The economy in 2001 was already in recession and Greenspan was rushing to the rescue (see Greenspan’s Last Hurrah: His Wild Finish Before the Crisis 10-30-22). The new millennium was the start of weak jobs numbers and very close elections in 2000 and 2004 as both those elections turned on a single state and late election call in the end (Florida in 2000, Ohio in 2004). The TMT bubble imploded and then Enron sent a lot of power capex programs into a tailspin.
The 2000 to 2009 period ended up as the lost decade for equities and numerous hot sectors were rolled back. The Auto sector was contracting with a vengeance. TMT was a mess. We thus see GWI and GWII as the worst employment stretch by any two term President listed at negative jobs growth in GW I and only +2.2 million in GW II for a +1.7% payroll increase. The second term ended with a systemic credit crisis unfolding.
Obama I and Obama II: The 2009 year started off with a plunge to new lows in equities, the start of a rising default rate, bank stress and bailouts playing out, and a crash of the auto sector that saw massive downsizing and two bankruptcies (GM and Chrysler). Unemployment had soared and was slow to recover. Housing was in crisis and in a virtual shutdown. Lenders and financial services subsectors saw payrolls hit and the default rate drove a mix of downsizing and liquidation. The good news was the boomerang off the cyclical lows with 5.3 million jobs added in 2010 to 2012 after the 2009 trough year. Another 10.3 million jobs were added in Obama II. Obama I delivered only 226K jobs in total. We can do an ex-2009 cut for Obama since he inherited the systemic meltdown to start 2009 just as we can do an ex-2020 cut for Trump. We present both of those. Obama II posted 2.58 million new jobs a year.
Trump single term: After Obama added 2.58 million jobs per year in Obama II, we see Trump add 2.1 million jobs a year for the first 3 years before the bottom fell out with COVID. In other words, Trump added jobs at a slower annual rate in 3 years than Obama did in his second term. The full 4 years of Trump saw a decline of -2.9 million jobs. The 8 years of GW Bush and 8 years of Obama averaged under 800K in jobs per year with most of that in Obama II. If we then drop in Trump’s single term, the average drops below 500K. The COVID setback was one for the ages as was the systemic bank crisis that Obama inherited. Either way, only Obama pulled off a full term of solid jobs growth (it helps when you get reelected).
Biden term to date: Biden’s first 2+ years through July 2023 exceed the cumulative job adds of GW I and II, Obama I and II, and Trump’s single term. That’s what the numbers say. Whether you think his employment success is a function of measured, prudent stimulus to build jobs and create new growth markets or you see it as purely a post-COVID rebound effect, the fact is that number of payroll additions under Biden in less than 3 years beats the best single term of any President on the list. That is with 17 months of payrolls to go in his term. There have been other crises and other rebounds. The number 13 million (or 12 million) cannot be found on the list. Even Carter with his one troubled term put up 10.5 million jobs and better GDP growth than Obama and Trump.
The above chart takes the annual level numbers from payroll additions and adds some granularity to annual percentage changes in payroll. We see 9 negative years (1 under Nixon II/Ford in 1974, 2 under Reagan in 1981-1982, 1 under GHW Bush in 1991, 3 under GW Bush in 2001-2002 and 2008, 1 under Obama in 2009, and 1 under Trump in 2020.
The timeline spans the wild and formative years of the modern economy and banking system across a period that saw raging bull markets, bubbles, a systemic bank crisis and a global pandemic. We leave it in the eyes of the beholders to score the various administration on what transpired under them. It is very hard to match Reagan II when you do an overlay of GDP growth, but Clinton put together very strong terms in Clinton I and II and then balanced the budget while working across the aisle. Reagan also worked across the aisle.
The bipartisan successes under Reagan and Clinton might be food for thought with the current lineup in Washington turning the “aisle” into a political minefield if you dare cross it in “us vs. them” fashion. The average Rep in Congress is not the brightest bulb, but they have the added drawback of being easily steered by the power brokers above them to do their bidding.
See also:
1Q23 GDP: Facts Matter 6-29-23
US Debt % GDP: Raiders of the Lost Treasury 5-29-23
Expansion Checklist: Recoveries Lined Up by Height 10-10-22
Business Cycles: The Recession Dating Game 10-10-22
Unemployment, Recessions, and the Potter Stewart Rule 10-7-22
Inflation: Events ‘R’ Us Timeline 10-6-22
Contributors
Glenn Reynolds, CFA (glenn@macro4micro.com)
Kevin Chun, CFA (kevin@macro4micro.com)