Friday, forecasters expect the Labor Department will report that the economy created 190,000 jobs in October—that’s well below the 260,000 averaged in 2014.
We can also expect the White House to again proclaim that the economy is doing well—touting 61 consecutive months of jobs creation—and liberal commentators like New York Times columnist and CNBC analyst John Harwood will no doubt offer this as more proof that the economy does better with a Democrat in the White House.
So much depends on the circumstances in which each president governs. For example, does his party control one or both houses of Congress and more importantly, what was the state of the economy bequeathed by his predecessor?
The best apples to apples comparison are the rather difficult conditions of Presidents Reagan and Obama inherited and how the fortunes of America’s families then progressed—with the former relying on conservative prescriptions and the latter on activist government to stimulate growth.
Obama confronted a terrible financial crisis and endured a punishing recession. Unemployment peaked at 10 percent in his first term, but since the economy has reclaimed and added 12.6 million jobs and employment is up 9.8 percent.
The Gipper faced tough times too—double-digit unemployment and interest rates and a bruising recession. Unemployment peaked at 10.8 percent but subsequently the economy added more than 17.2 million jobs and employment rose 19.4 percent.
It wasn’t just lower taxes and less spending but rather, a reliance on private decisions to guide recovery. [Reagan] cleared a path for businesses, large and small, to invest as they deemed fit and raise wages as they decided they could afford, and encouraged the unemployed to get out and look for work.
The reason Reagan was able to create so many more jobs—in a much smaller economy—is quite simple. It wasn’t just lower taxes and less spending but rather, a reliance on private decisions to guide recovery. He cleared a path for businesses, large and small, to invest as they deemed fit and raise wages as they decided they could afford, and encouraged the unemployed to get out and look for work.
Whereas from subsidies for solar energy projects and mandatory health insurance to incessant preaching that ordinary folks are victims of racism, sexism and the evil machinations of the well-off, Obama has sought to micromanage business through an explosion of regulations and to pacify a middle class under siege and Americans underemployed or not working at all with giveaways from free contraception to forgiving college debt.
Through the first 25 quarters of Obama’s recovery, GDP growth has averaged 2.1 percent, whereas during the comparable period for Reagan, GDP advanced at a 4.6 percent annual pace.
And whereas Reagan’s social safety net assisted the unemployed, Obama’s pays the unemployed to be idle.
The 7 million men between the ages of 25 and 54 who are neither employed nor are looking for work are rewarded with food stamps, the earned income tax credit if their spouse is a low-income worker and federal healthcare subsidies—and even virtually free health care through Medicaid in many states.
For folks refusing to do anything productive with their lives, Obama is offering an even more attractive benefit—free money in the form of a government pension.
Despite the fact that Americans are living healthier and longer lives and work is generally less physically challenging, the percentage of adults ages 16 to 64 certified as permanently incapable of working by the Social Security Disability Insurance program now stands at 5.1 percent—about double the figure in Reagan’s day.
A broken appeals system offers a decided advantage to those crafty applicants who hire a lawyer—a situation the Obama administration refuses to fix.
For hard working families, the results are predictable—annual family incomes have declined about $1650 during the Obama years, whereas those increased $3900 during Reagan’s tenure.
For the indolent, this is the Second Age of Pericles but for those who toil for their daily bread, Obama’s pronouncements that the economy is much improved and performs better with Democrats in control have a decided Orwellian ring.
Peter Morici served as Chief Economist at the U.S. International Trade Commission from 1993 to 1995. He is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He is the five time winner of the MarketWatch best forecaster award. Follow him on Twitter @PMorici1.