Barack Obama has set an economic record during his presidency, and it’s one no president would ever want.When he leaves office in two weeks, he’ll be the first president since Herbert Hoover (who presided over the beginning of the Great Depression) to never see a year with three percent average GDP growth.
With economic growth so poor, how can Obama take credit for taking our unemployment rate below five percent? Thanks to trickery in how the unemployment rate is calculated.
The unemployment rate we usually see quoted is known as the “U-3 unemployment” rate, and simply divides the number of unemployed individuals into the labor force to find out what percentage of the labor force is unemployed. However, to be counted in the labor force, you must be above the age of 16, not institutionalized, and looking for work.
The “looking for work” criteria is key. That way a seventeen-year-old in high school who doesn’t even have work on his mind wouldn’t be included in the unemployment statistics, thereby exaggerating the unemployment rate. On the other hand, if the economy is so poor that people simply begin retiring early, or give up looking for work, they’re no longer classified as being in the “labor force.” Thus, many people who were unemployed are no longer categorized as such by leaving the labor force – even though they still don’t have jobs.If we’re going to include those who’ve left the labor force in the statistics, they don’t look quite as rosy as the picture Obama paints.
First here’s the picture of so-called “unemployment” per the government. Looks good, right?
But if you include “marginally attached workers,” the unemployment rate is 9.2 percent, almost double the official 4.7 percent rate.
To better understand just how unimpressive this is – let’s benchmark Obama against The Gipper:
Chart source: Against Crony Capitalism
Note the immense gap between population and employment growth – and then take a look at Obama’s final job report, and it’s practically a metaphor for the economy under his presidency.
In his final jobs report, 157,000 jobs were added to the U.S. economy – which is barely above the 145,000 jobs our economy needs to produce each month just to keep up with population growth. But throughout his term, those out or the labor force have grown faster than those “employed.”
Hands up, everyone who’s so happy to see this end.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]