To build a prosperous future, we must trust people with their own money and empower them to grow our economy. As we meet tonight, our economy is undergoing a period of uncertainty. America has added jobs for a record 52 straight months, but jobs are now growing at a slower pace.
On February 1st, the Bureau of Labor Statistics released new jobs figures for January, showing a loss of 17,000 jobs. This ended the streak but Bush continued to mention the record of 52 consecutive months, often crediting it to his tax cuts. For example, on February 8th, Bush said the following during remarks to the Conservative Political Action Conference:
Despite these dire predictions, the tax cuts we passed contributed to a record 52 months of job creation. (Applause.) They helped produce strong economic growth -- and the increased revenues from that growth have put us on track to a balance our budget by 2012. (Applause.) Here is the bottom line: tax relief works. (Applause.)
Bush similarly mentioned the 52 month record and the role that his tax cuts played in bringing it about on February 25th and March 12th as did Vice President Cheney on March 10th and April 25th. It was of course mentioned by a number of other sources as well.
Was this 52 month record truly a significant achievement, surpassing the oft-mentioned job creation under Reagan and Clinton? Following is a graph generated on the Bureau of Labor Statistics website showing the monthly job growth in total nonfarm jobs since 1980:
Monthly Growth in Total Nonfarm Employment, Seasonally Adjusted (in thousands)
The actual numbers and sources are at http://www.econdataus.com/jobgro50.html. As can be seen, there were 52 consecutive months of job growth under Bush, from September 2003 to December 2007. However, Clinton missed having 86 months of consecutive job growth (from April 1993 to May 2000) by just three slight monthly declines of 16, 18, and 19 thousand jobs. And Reagan (combined with H.W. Bush) missed having 82 months of consecutive job growth (from September 1983 to June 1990) by just one monthly decline of 93 thousand jobs.
Did Bush's tax cut provide some special protection against small monthly declines? To answer this, one must first be aware of the fact that the job numbers are "seasonally adjusted". Without seasonal adjustment, the numbers would show a loss every January, at the end of the holiday season. In fact, they show a loss in every January on record (since 1940) and losses of over 2 million in every January since 1990.
Secondly, the method for calculating the seasonal factors changed in June 2003, just 3 months before the 52 month record started. The following explanation can be found on the Bureau of Labor Statistics website:
Concurrent seasonal adjustment
Beginning in June 2003, the CES program converted from its current practice of updating seasonal factors twice a year to updating them every month. Concurrent seasonal adjustment is technically superior to semiannual updates because it uses all available monthly estimates, including those for the current month, thereby eliminating the need to project the seasonal factors. With the introduction of concurrent seasonal adjustment, BLS no longer publishes seasonal factors for CES national estimates. For more information, please read the following paper on concurrent seasonal adjustment. (HTML) (PDF 182K)
Following is an excerpt from the first link:
As Table 1 illustrates, concurrent adjustment produces a smoother seasonally adjusted series for Total Nonfarm plus all nine industry divisions. Taken with the results from Figure 1, this indicates that CES will benefit from a switch to concurrent seasonal adjustment by producing employment series with less variability in the over-the-month changes.
Hence, the 52 month record may be largely due to this change to concurrent seasonal adjustment. In any event, the above graph seems to show that the average monthly growth was higher under Reagan and Clinton. This can be seen much more clearly in the following graph which shows the 12-month growth in jobs since 1950:
12-Month Growth in Total Nonfarm Employment, Seasonally Adjusted (in thousands)
As can be seen, average job growth was clearly higher under Reagan and Clinton. This is also clear from my prior post of March 18th. In addition, the above graph shows that the length of positive job growth was much longer under Reagan and Clinton if one uses a longer unit of time (12 months in this case).
In summary, it seems clear that the record of 52 consecutive months of job growth is not indicative of superior job growth. Consecutive months of positive job growth is just one of many indicators and, in my opinion, one of the more flawed and least significant. Some would call the use of this statistic while ignoring other statistics to be cherry-picking. At the very least, it shows the importance of examining the data yourself and/or getting opposing views on any statistics that one comes across in the political arena.