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    Saturday, November 8, 2014

    14 Facts About The Obama Presidency - Debunked - PART 1

    I saw this posted to my Facebook timeline, and decided that it needed to be debunked. This is part 1 of a 14 part series on it.

    But, I want to thank the Left for finally acknowledging that Reagan's economic record is the benchmark against which all others should be judged.  After arguing with them for 30 years about it, it's nice to see them coming aboard.

    On to the analysis:

    "1. We've now had 63 straight months of economic expansion."

    This would cover the period June 2009 - September 2014, when this article was written, and is in fact, wrong.  Contraction and Growth in the economy is measured by GDP, which is reported quarterly.  In the 63 months preceding September 2014, Q2 of 2010 and Q12014 both experienced negative growth.  Thus, by a technical definition of expansion/contraction, the statement is false.  Perhaps the author is conflating economic expansion to a not being in a recession.  Economists consider a recession to be when there are at least 2 consecutive quarters of negative growth, and that, indeed, has not happened since this recovery began.  However, the statement does not say we've had a 63 month recovery, which would be true.  It says, instead, we've had 63 months of economic expansion, which is a falsehood. Later in the article, Hartung uses another measure to claim the 63 month expansion, but, it's really not the classical definition, and represents cherry picking.

    "That’s right, for 63 consecutive months the US economy has gotten progressively better. That includes 54 consecutive months of private sector job growth. Forbes magazine, no fan of President Obama, crunched the numbers and demonstrated how the economic recovery under President Obama has been better in just about every measurable way than the recovery under President Reagan."

    The author is not a Forbes writer.  It is penned by Adam Hartung, a Forbes online contributor.  Forbes caveats: "Opinions expressed by Forbes Contributors are their own."  Thus, Forbes magazine does not give Mr. Hartung's analysis their imprimatur, therefore, it is also false to claim that Forbes magazine says this.  Adam Hartung, a Forbes Contributor, is making this case, not Forbes.  It's kind of like saying if I get my letter to the editor published in the Greensboro News & Record, it reflects their views, or, because my Dad worked there for 30 years, anythign I say reflects the editorial view of the paper.  That would be lying.  No different than this group passing this off as Forbes' work.

    But, even though I have demonstrated that the statement in the posting is false, let's still give the analysis a look and see what it says.

    The headline is "Obama Outperforms Reagan On Jobs, Growth And Investing" but the article really focuses on jobs.  I am going to stipulate that taken from the incredible shellacking the stock market took in the wake of the financial crisis, DJIA/S&P500 growth has been extremely good in this recovery, as it also was in the Reagan recovery.  I'll concede the point that stocks performed very well in both, and that $1 invested at the beginning of this recovery has returned a (slightly) better return than $1 at the beginning of the Reagan recovery.

    But, not everyone is an investor, and while I appreciate Hartung's argument for privatizing social security, the reason the Dems just got killed is the jobs situation, and here, his analysis is off base.

    Let's look at it.

    On the surface, we have a similar, and typical unemployment curve in both cases, and, indeed, measured solely by the unemployment rate, which is that top line number we all see, the Obama graph looks pretty good, even outpacing Reagan's recovery.

    But that's not the entire story.  And Hartung knows this. Unfortunately, his explanation lays the entire decrease in labor force participation at the hands of demographics.  However, many economists peg that number as explaining about 25% of it.  The rest is due to people in school, people on disability (in fact, today there are a record number of Americans receiving Social Security disability benefits), and people who have simply dropped out of the workforce.

    This article is a detailed discussion on the factors driving decreases in labor participation and is worth a read.

    The point here is that there really is no doubt that a focus on the larger labor participation decline may actually help explain why, despite these good top line numbers, people don't feel good about this recovery, and it may explain why they voted as they did Tuesday last.  While the numbers look good, a deeper analysis reveals flaws with them, and people actually feel that.

    Let's look at jobs from another angle, because Hartung is all aflutter over the awesome 200k/month increases averaged during the Obama recovery.  Some number of new jobs are required just to keep the unemployment rate steady  due to population growth and new people entering the workforce.

    These numbers vary widely based on the actual population and economic conditions, but somewhere between 100k-180k/month.

    I will make two points from here:


    1. There are about 7M more people working today than June 2009, the last month of the recession.  That's an average, per month increase of 110k.  
    2. During the Reagan Recovery (Nov 1982 - Jan 1989), the economy added 15M jobs, for an average of 214k/month.  Keep in mind the workforce population was about 50M (about 20% less people) than today.  

    Obama has quite a bit of work to do in the next 2 years to approach this job creating record.

    2 comments:

    Parker Dutro said...
    This comment has been removed by the author.
    Parker Dutro said...

    Thanks for this. I was going to write a point by point refutation of the 14 Facts article but thought better of it when I remembered that my 12 week old daughter is confiscating all of what once was my free time. I will look forward to reading the remaining 13 installments as you produce th