President Bush was busy crowing today about the job growth that has occurred on his watch, citing the creation of more that 8 million jobs since August 2003 and “the longest continuous months of job growth on record.”
In fact, while the current business cycle that began in March of 2001 has lasted longer than average, its job growth record has been uniquely weak. Figure A plots job growth over three business cycles that have lasted at least 78 months (the length of the current cycle as of September).
The current cycle is an obvious laggard, with job growth up far less than the others. Payrolls were only 4.3% higher in September 2007 than in March 2001, due both to the long jobless recovery that lasted through August 2003, and the subsequent low growth rate of jobs compared to past cycles.1
By month 78, the other three cycles posted growth rates of at least 10% (compared to the current 4.3%).
Note also that the White House and other partisans often ignore the economists’ convention of measuring job growth over the business cycle (to control for macroeconomic conditions) and have instead started counting from the end of the jobless recovery, in August 2003, or month 29 of the cycle.
Even by this cherry-picked method, however, the weakness in the current cycle is apparent. Figure B shows the growth in jobs over the same four cycles in Figure A, but this time using only months 29-78, the equivalent of August 2003-September 2007 in the current case. Here again, the weakness of the current cycle is evident.
The president is correct that job growth has been positive for many months running, but these simple historical comparisons reveal the weakness in this important measure of our economic health. As such, they help to explain why, despite White House spin, many working Americans remain unsatisfied with current economic conditions.
1. Were we to include the negative benchmark revision announced by the Bureau of Labor Statistics today, the growth rate over this cycle would fall to 4.1%.