Sort Of Good News On the Economy

The Labor Department released its December jobs report today, indicating that 200,000 non-farm payroll jobs were added last month, bringing the unemployment rate down to 8.5%. President Obama hailed the news as evidence that the economy is “moving in the right direction.” And, indeed, the economy continues to grow and to add jobs–only slowly.

To put today’s numbers in context, we need to look at job creation over the last decade-plus. This chart, from Trading Economics, shows payroll jobs gained or lost on a monthly basis from January 2000 to January 2012:

Note how poor job growth has been from 2009 to the present, compared with the Bush administration–which in this respect, like others, is beginning to seem like a golden age. Employment growth is especially weak in view of the massive job losses of late 2008 and early 2009. By rights, jobs should be exploding as the economy improves, and indeed they started to do so, briefly, in early 2010, before returning to the doldrums. By historical standards, last month’s 200,000 jobs is nothing to brag about.

Nor does it begin to match the confident predictions that the Obama administration has been making since it took office. We have reproduced this chart before; it is now updated, via InstaPundit. The chart was prepared by President Obama’s economists to show the predicted effects of the stimulus bill. The Obama administration alleged that without the bill, unemployment would rise as high as 9% before declining to around 6.7% by early 2012. The stimulus bill, Obama assured us, would cause unemployment to stay below 8%, so that by now it would be down to 6%:

The reality, of course, has been entirely different. Despite the stimulus–or, I think, in part because of it–unemployment rose to over 10% and has remained stubbornly high for three years. 8.5% joblessness, the number greeted with such relief by the administration, is 2.5% higher than they told us we would be at this point.

The administration has continued to make rosy predictions that bear little relation to reality. To take just one example, in April 2010, Joe Biden predicted that “Some time in the next couple of months we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.” At that time, “[t]he administration’s own forecast projects that the labor market will add about 100,000 jobs a month for the rest of the year, then around 200,000 jobs a month next year [2011], and 250,000 jobs a month in 2012.” That forecast, too, failed to materialize. And despite their optimistic predictions, Obama administration officials don’t even dream of the sort of massive job creation that the Reagan administration fueled in the 1980s.

So, was today’s Labor Department report good news? Yes, but only within the context of the chronically underperforming Obama administration.