In-depth analysis on Credit Writedowns Pro.

Chart of the day: Job Creation 2007-2012

This chart from President Obama’s pinterest account is pretty interesting (pointer to Marc Chandler).

Here’s what I see: job destruction during a cyclical downturn followed by massive job destruction after the Lehman failure followed by a steady climb toward tepid job creation. The narrative that seems to support this chart is that we had a cyclical downturn in 2008 that aggressively worsened after the Lehman failure. Job destruction on a massive scale lasted for half a year before the situation could be reversed.

How do you spin this negatively against Obama? I’m not sure you can but you could try to map this chart against other recessions and argue job creation was slower. But you’d need the have data that supported that conclusion.

Objectively speaking, I see this as a very strong chart for Obama. Thoughts?

Update: The first answers I got regarding pushback are:

  • What kinds of jobs were created, in which sectors and what pay level compared to the median?
  • Why private sector jobs only? What happens when you add in total job creation?

If I get other questions, I will add.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

15 Comments

  1. David Lazarus says:

    Overall this is positive for Obama, but the fact that the shake out has left millions no longer on the unemployment rolls looks bad. Though the policy is not enabling government to be any more creative with new programs. It has been bad enough to leave millions out of work but not bad enough to get bi-partisan support for a decent jobs program. Though I doubt that it will improve after the next election no matter who wins. Still a lot of mal-investment out there holding on because of low interest rate, so prospects for growth are not good either.

  2. Fred says:

    Seriously? You surely must know that economies have their own cycle and the bounce we’ve seen in employment is (a) very very weak relative to past recessions and (b) a result of the economy itself hitting bottom and rebounding. Were this attributable to Obama, wouldn’t he have had to implement an actual plan out of the gate to really take credit? As it were, the rebound began about the time he was sworn in, arguing in effect that he had nothing to do with it. Finally, recall that Obama’s own projections for unemployment were much lower initially suggesting that his team grossly overestimated the recovery as well as their ability to impact that.

    • You haven’t read the post very carefully. Nowhere do I write that Obama, the Fed, Congress, the bailouts, or even sunspots CAUSED the rebound in job creation. Read it again.

      What I said was “The narrative that seems to support this chart is that we had a cyclical downturn in 2008 that aggressively worsened after the Lehman failure. Job destruction on a massive scale lasted for half a year before the situation could be reversed.”

      And the question is how you spin that AGAINST Obama, not how you show he caused this rebound. I don’t think you can spin it against him and that’s the point here. This is a strong chart for him as a result.

      • Fred says:

        I hear you and see your point. I guess my view would be that the need to spin will be muted since even current unemployment is way too high to be touted as an achievement – if it is heralded as a success, it will become a lightening rod for its relative weakness. Assuming Obama doesn’t make this a central piece of the campaign, typical voters are generally incapable of processing anything that involves more than 3 or 4 seconds of their attention span. They’ll be thinking about how high gas prices are and if they set their DVR properly for Dancing with the Stars.

    • David Lazarus says:

      You also forget that the stimulus was maliciously designed to be as ineffective as possible with such a large component as a tax refund.

  3. Dave says:

    Obama and his administration, have only slowed the recovery- if not stopped it in its tracks. the idea of adding the largest entitlement program in the middle of a recession ON TOP of the trillions in ponzi entitlements is vulgar and the worst form of treason.

    Instead of CUTTING spending, the drunken sailors in the White House and Congress expanded spending exponentially.

    If you want to defend this, you need your head examined.

    • Same comment to you as to the poster above, especially since I am on record as saying Romney will win the general election. “You haven’t read the post very carefully. Nowhere do I write that Obama, the Fed, Congress, the bailouts, or even sunspots CAUSED the rebound in job creation. Read it again.”

      Your ideological bias against Obama is pretty obvious. This post has nothing to do with administration policies, but rather the narrative that supports re-election. From where I sit, objectively this chart is a good one for Obama.

  4. Dave says:

    Romney has no chance of winning. He is also a joke.

    Ideology aside, to say that Obama had anything to do with the recovery is silly. You can say the Fed did, but that would also be untrue. Their actions have proved futile (and there is no ideology there.) My point is that piling on debt and thinking that it would magically help is laughable. They couldn’t even agree to cutting 1 Trillion while the world was watching them. Why would you add an entitlement now? Bush was almost as bad with his prescription drug program, but at least there was no recession at the time, making it just slightly less stupid.

    If you are saying your point was not that Obama and his administration CAUSED the rebound, what was the point of your article and a chart that shows “Obama takes office”? What was that about? Why do you feel the need to defend him instead of looking at it objectively? I had hopes for him when he came into office, but none of that came to fruition.

    There is not much a President can to do help the economy, and they get too much credit/fault for the current economic situation. HOWEVER, one huge impact is spending and making it worse. He initiated the worst possible response to a recession that is possible. I am still stunned when I think about it.

    • You don’t get it. I am not “defending” anything. This is NOT a policy piece or a retrospective. It is about forecasts. The question is whether the jobs chart, especially if sustained will be a boon or hindrance to Obama as an incumbent. There is nothing else to it. I stay clear of policy now because of people like you with strongly held views looking for an argument.

      As for forecast, I am surprised how strong this chart looks for Obama. If that trend continues he will have a strong narrative.

      P.S. the president really has a lot less control over economic policy than we are led to believe. Even if the the trend is up, you can’t say the President CAUSED it. But that IS how it plays at the ballot box.

      • Dave Holden says:

        I’m not sure how well this plays for Obama, I suspect that this job creation reflects a secular lowering of incomes across the middle classes. This combined with real inflation in the stuff people buy and I reckon a lot of folks are feeling might squeezed at present. As such a lot of folks will find him pushing “job creation” record sticks in their craw. That said as a debating point it doesn’t hurt.

        I think the biggest thing in Obama’s favour is the weakness of the Republican candidates and if Romney is chosen his religion. It’s clear a sizable section of his own party don’t want him as their candidate.

        All that said do you think there would be much of a change in Economic policy if Romney gets in?

        • That all seems about right. I think the key for Obama is that the job trend continue. If it does, then the chart will be a good one come the general elections in the fall because it will line up better with what people are feeling by that time. That’s where this post is about forecasting. But, there is no guarantee it will continue. My earlier pick of Romney is predicated on a weakening economy in the second half.

          As for weak candidates among Republicans, I can’t think of anyone in the Republican party who would be stronger than Romney. Maybe Jeb Bush but his last name is a liability because it would be a third Bush. I think Romney is as good as it is going to get for the Republicans.

          • Dave Holden says:

            What I find fascinating about the American electorate is the apparent willingness of the lower classes to vote against their interests particularly on things like healthcare. But maybe I don’t have a full picture.

            On Romney, I agree he will have the broadest appeal despite or perhaps because of the fact that he makes Tony Blair looked principled..

        • Fred says:

          Actually, it’s worthwhile looking at IRS data for adjusted gross income. The top 1% has seen a greater destruction of wealth and income than the every strata below. The meme that the “middle class” has suffered more is fantasy. IRS data does not support it. In fact, what IRS data shows is that the lowest tax brackets are better off than they were 10 years ago and all of tax brackets are following the middle bracket’s trend line. It is simply not correct to say higher unemployment has had a larger impact on the 99%. What is true – and what I think resonates from a political standpoint – is that in the near term, those with savings can absorb unemployment more easily than those in the middle, but that doesn’t justify taking more from the top 1% when income growth rates are substantially less, the higher up the tax bracket you go. I also think that what is happening is the top 5% is looking at the class warfare talk as a likely future assault on those making what is actually middle class – $65k+. Obama knows that the myth of the persecuted middle class plays well nationally so I fully expect more of this, but it won’t resonate against the historically depressed rebound reflected in unemployment. It’s Romney’s race to lose and that could certainly happen. Either way, I still wouldn’t want to be President because this is the future – we will be lucky to see unemployment get below 7% and stay there. Any economist worth their salt knows that the long term solution is twofold: deficit attrition via increased mortality rates and dollar debasement.

          • David Lazarus says:

            The Republicans have the increased mortality option targeted with plans for the abolition of Food Stamps. Republicans are also opting for debasing the economy because Bernanke will not allow asset deflation.

            The numbers of the 1% becoming unemployed are practically zero, because they are the employers. Here in the UK, directors of the FTSE have on average had a 49% increase last year when the rest of the population had a drop in living standards because wages did not keep place with inflation.