Obama Outperforms Reagan On Jobs, Growth And Investing - Forbes magazine

[RecycleMichael]

http://www.forbes.com/sites/adamhartung/2014/09/05/obama-outperforms-reagan-on-jobs-growth-and-investing/

The Bureau of Labor Statistics (BLS) today issued America's latest jobs report covering August.  And it's a disappointment.  The economy created an additional 142,000 jobs last month. After six consecutive months over 200,000, most pundits expected the string to continue, including ADP which just yesterday said 204,000 jobs were created in August.

Even though the plus-200,000 monthly string was broken (unless revised upward at a future date,) unemployment did continue to decline and is now reported at only 6.1%.  Jobless claims were just over 300,000; lowest since 2007.  Despite the lower than expected August jobs number, America will create about 2.5 million new jobs in 2014. And that is great news.

Back in May, 2013 (15 months ago) the Dow was out of its recession doldrums and hitting new highs. I asked readers if Obama could, economically, be the best modern President?  Through discussion of that question, the number one issue raised by readers was whether the stock market was a good economic barometer for judging "best."  Many complained that the measure they were watching was jobs – and that too many people were still looking for work.

To put this week's jobs report in economic perspective I reached out to Bob Deitrick, CEO of Polaris Financial Partners and author of Bulls, Bears and the Ballot Box (which I profiled in October, 2012 just before the election) for some explanation.  Since then Polaris' investor newsletters have consistently been the best predictor of economic performance. Better than all the major investment houses.

This is the best private sector jobs creation performance in American history

Unemployment Reagan v ObamaBob Deitrick: "President Reagan has long been considered the best modern economic President.  So we compared his performance dealing with the oil-induced recession of the 1980s with that of President Obama and his performance during this 'Great Recession.'

"As this unemployment chart shows, President Obama's job creation kept unemployment from peaking at as high a level as President Reagan, and promoted people into the workforce faster than President Reagan.

"President Obama has achieved a 6.1% unemployment rate in his sixth year, fully one year faster than President Reagan did.  At this point in his presidency, President Reagan was still struggling with 7.1% unemployment, and he did not reach into the mid-low 6% range for another full year.  So, despite today's number, the Obama administration has still done considerably better at job creating and reducing unemployment than did the Reagan administration.

"We forecast unemployment will fall to around 5.4% by summer, 2015.  A rate President Reagan was unable to achieve during his two terms."

What about the Labor Participation Rate?

Much has been made about the poor results of the labor participation rate, which has shown more stubborn recalcitrance as this rate remains higher even as jobs have grown.

U3 v U6 1994-2014Deitrick: "The labor participation rate adds in jobless part time workers and those in marginal work situations with those seeking full time work.  This is not a "hidden" unemployment.  It is a measure tracked since 1900 and called 'U6.' today by the BLS.

"As this chart shows, the difference between reported unemployment and all unemployment – including those on the fringe of the workforce – has remained pretty constant since 1994.

Source: Bureau of Labor Statistics - Databases, Tables and Calculators by Subject
Source: Bureau of Labor Statistics – Databases, Tables and Calculators by Subject

"Labor participation is affected much less by short-term job creation, and much more by long-term demographic trends. As this chart from the BLS shows, as the Baby Boomers entered the workforce and societal acceptance of women working changed, labor participation grew.

"Now that 'Boomers' are retiring we are seeing the percentage of those seeking employment decline.  This has nothing to do with job availability, and everything to do with a highly predictable aging demographic.

"What's now clear is that the Obama administration policies have outperformed the Reagan administration policies for job creation and unemployment reduction.  Even though Reagan had the benefit of a growing Boomer class to ignite economic growth, while Obama has been forced to deal with a retiring workforce developing special needs. During the eight years preceding Obama there was a net reduction in jobs in America.  We now are rapidly moving toward higher, sustainable jobs growth."

Economic growth, including manufacturing, is driving jobs

When President Obama took office America was gripped in an offshoring boom, started years earlier, pushing jobs to the developing world.  Manufacturing was declining in America, and plants were closing across the nation.

This week the Institute for Supply Management (ISM) released its manufacturing report, and it surprised nearly everyone.  The latest Purchasing Managers Index (PMI) scored 59, two points higher than July and about that much higher than prognosticators expected.  This represents 63 straight months of economic expansion, and 25 consecutive months of manufacturing expansion.

New orders were up 3.3 points to 66.7, with 15 consecutive months of improvement and reaching the highest level since April, 2004 – five years prior to Obama becoming President.  Not surprisingly, this economic growth provided for 14 consecutive months of improvement in the employment index.  Meaning that the "grass roots" economy made its turn for the better just as the DJIA was reaching those highs back in 2013 – demonstrating that index is still the leading indicator for jobs that it has famously always been.

As the last 15 months have proven, jobs and economy are improving, and investors are benefiting

The stock market has converted the long-term growth in jobs and GDP into additional gains for investors.  Recently the S&P has crested 2,000 – reaching new all time highs.  Gains made by investors earlier in the Obama administration have further grown, helping businesses  raise capital and improving the nest eggs of almost all Americans.  And laying the foundation for recent, and prolonged job growth.

Investment Returns Reagan v ObamaDeitrick: "While most Americans think they are not involved with the stock market, truthfully they are.  Via their 401K, pension plan and employer savings accounts 2/3 of Americans have a clear vested interest in stock performance.

"As this chart shows, over the first 67 months of their presidencies there is a clear "winner" from an investor's viewpoint. A dollar invested when Reagan assumed the presidency would have yielded a staggering 190% return.  Such returns were unheard of prior to his leadership.

"However, it is undeniable that President Obama has surpassed the previous president.  Investors have gained a remarkable 220% over the last 5.5 years!  This level of investor growth is unprecedented by any administration, and has proven quite beneficial for everyone.

"In 2009, with pension funds underfunded and most private retirement accounts savaged by the financial meltdown and Wall Street losses, Boomers and Seniors were resigned to never retiring.  The nest egg appeared gone, leaving the 'chickens' to keep working.  But now that the coffers have been reloaded increasingly people age 55 – 70 are happily discovering they can quit their old jobs and spend time with family, relax, enjoy hobbies or start new at-home businesses from their laptops or tablets.  It is due to a skyrocketing stock market that people can now pursue these dreams and reduce the labor participation rates for 'better pastures."

Where myth meets reality

There is another election in just eight weeks.  Statistics will be bandied about.  Monthly data points will be hotly contested.  There will be a lot of rhetoric by candidates on all sides.  But, understanding the prevailing trends is critical.  Recognizing that first the economy, then the stock market and now jobs are all trending upward is important – even as all 3 measures will have short-term disappointments.

There are a lot of reasons voters elect a candidate.  Jobs and the economy are just one category of factors.  But, for those who place a high priority on jobs, economic performance and the markets the data clearly demonstrates which presidential administration has performed best.  And shows a very clear trend one can expect to continue into 2015.

Economically, President Obama's administration has outperformed President Reagan's in all commonly watched categories.  Simultaneously the current administration has reduced the deficit, which skyrocketed under Reagan.  Additionally, Obama has reduced federal employment, which grew under Reagan (especially when including military personnel,) and truly delivered a "smaller government."  Additionally, the current administration has kept inflation low, even during extreme international upheaval, failure of foreign economies (Greece) and a dramatic slowdown in the European economy.

[Hoss]

http://www.forbes.com/sites/adamhartung/2014/09/05/obama-outperforms-reagan-on-jobs-growth-and-investing/

The Bureau of Labor Statistics (BLS) today issued America's latest jobs report covering August.  And it's a disappointment.  The economy created an additional 142,000 jobs last month. After six consecutive months over 200,000, most pundits expected the string to continue, including ADP which just yesterday said 204,000 jobs were created in August.

Even though the plus-200,000 monthly string was broken (unless revised upward at a future date,) unemployment did continue to decline and is now reported at only 6.1%.  Jobless claims were just over 300,000; lowest since 2007.  Despite the lower than expected August jobs number, America will create about 2.5 million new jobs in 2014. And that is great news.

Back in May, 2013 (15 months ago) the Dow was out of its recession doldrums and hitting new highs. I asked readers if Obama could, economically, be the best modern President?  Through discussion of that question, the number one issue raised by readers was whether the stock market was a good economic barometer for judging "best."  Many complained that the measure they were watching was jobs – and that too many people were still looking for work.

To put this week's jobs report in economic perspective I reached out to Bob Deitrick, CEO of Polaris Financial Partners and author of Bulls, Bears and the Ballot Box (which I profiled in October, 2012 just before the election) for some explanation.  Since then Polaris' investor newsletters have consistently been the best predictor of economic performance. Better than all the major investment houses.

This is the best private sector jobs creation performance in American history

Unemployment Reagan v ObamaBob Deitrick: "President Reagan has long been considered the best modern economic President.  So we compared his performance dealing with the oil-induced recession of the 1980s with that of President Obama and his performance during this 'Great Recession.'

"As this unemployment chart shows, President Obama's job creation kept unemployment from peaking at as high a level as President Reagan, and promoted people into the workforce faster than President Reagan.

"President Obama has achieved a 6.1% unemployment rate in his sixth year, fully one year faster than President Reagan did.  At this point in his presidency, President Reagan was still struggling with 7.1% unemployment, and he did not reach into the mid-low 6% range for another full year.  So, despite today's number, the Obama administration has still done considerably better at job creating and reducing unemployment than did the Reagan administration.

"We forecast unemployment will fall to around 5.4% by summer, 2015.  A rate President Reagan was unable to achieve during his two terms."

What about the Labor Participation Rate?

Much has been made about the poor results of the labor participation rate, which has shown more stubborn recalcitrance as this rate remains higher even as jobs have grown.

U3 v U6 1994-2014Deitrick: "The labor participation rate adds in jobless part time workers and those in marginal work situations with those seeking full time work.  This is not a "hidden" unemployment.  It is a measure tracked since 1900 and called 'U6.' today by the BLS.

"As this chart shows, the difference between reported unemployment and all unemployment – including those on the fringe of the workforce – has remained pretty constant since 1994.

Source: Bureau of Labor Statistics - Databases, Tables and Calculators by Subject
Source: Bureau of Labor Statistics – Databases, Tables and Calculators by Subject

"Labor participation is affected much less by short-term job creation, and much more by long-term demographic trends. As this chart from the BLS shows, as the Baby Boomers entered the workforce and societal acceptance of women working changed, labor participation grew.

"Now that 'Boomers' are retiring we are seeing the percentage of those seeking employment decline.  This has nothing to do with job availability, and everything to do with a highly predictable aging demographic.

"What's now clear is that the Obama administration policies have outperformed the Reagan administration policies for job creation and unemployment reduction.  Even though Reagan had the benefit of a growing Boomer class to ignite economic growth, while Obama has been forced to deal with a retiring workforce developing special needs. During the eight years preceding Obama there was a net reduction in jobs in America.  We now are rapidly moving toward higher, sustainable jobs growth."

Economic growth, including manufacturing, is driving jobs

When President Obama took office America was gripped in an offshoring boom, started years earlier, pushing jobs to the developing world.  Manufacturing was declining in America, and plants were closing across the nation.

This week the Institute for Supply Management (ISM) released its manufacturing report, and it surprised nearly everyone.  The latest Purchasing Managers Index (PMI) scored 59, two points higher than July and about that much higher than prognosticators expected.  This represents 63 straight months of economic expansion, and 25 consecutive months of manufacturing expansion.

New orders were up 3.3 points to 66.7, with 15 consecutive months of improvement and reaching the highest level since April, 2004 – five years prior to Obama becoming President.  Not surprisingly, this economic growth provided for 14 consecutive months of improvement in the employment index.  Meaning that the "grass roots" economy made its turn for the better just as the DJIA was reaching those highs back in 2013 – demonstrating that index is still the leading indicator for jobs that it has famously always been.

As the last 15 months have proven, jobs and economy are improving, and investors are benefiting

The stock market has converted the long-term growth in jobs and GDP into additional gains for investors.  Recently the S&P has crested 2,000 – reaching new all time highs.  Gains made by investors earlier in the Obama administration have further grown, helping businesses  raise capital and improving the nest eggs of almost all Americans.  And laying the foundation for recent, and prolonged job growth.

Investment Returns Reagan v ObamaDeitrick: "While most Americans think they are not involved with the stock market, truthfully they are.  Via their 401K, pension plan and employer savings accounts 2/3 of Americans have a clear vested interest in stock performance.

"As this chart shows, over the first 67 months of their presidencies there is a clear "winner" from an investor's viewpoint. A dollar invested when Reagan assumed the presidency would have yielded a staggering 190% return.  Such returns were unheard of prior to his leadership.

"However, it is undeniable that President Obama has surpassed the previous president.  Investors have gained a remarkable 220% over the last 5.5 years!  This level of investor growth is unprecedented by any administration, and has proven quite beneficial for everyone.

"In 2009, with pension funds underfunded and most private retirement accounts savaged by the financial meltdown and Wall Street losses, Boomers and Seniors were resigned to never retiring.  The nest egg appeared gone, leaving the 'chickens' to keep working.  But now that the coffers have been reloaded increasingly people age 55 – 70 are happily discovering they can quit their old jobs and spend time with family, relax, enjoy hobbies or start new at-home businesses from their laptops or tablets.  It is due to a skyrocketing stock market that people can now pursue these dreams and reduce the labor participation rates for 'better pastures."

Where myth meets reality

There is another election in just eight weeks.  Statistics will be bandied about.  Monthly data points will be hotly contested.  There will be a lot of rhetoric by candidates on all sides.  But, understanding the prevailing trends is critical.  Recognizing that first the economy, then the stock market and now jobs are all trending upward is important – even as all 3 measures will have short-term disappointments.

There are a lot of reasons voters elect a candidate.  Jobs and the economy are just one category of factors.  But, for those who place a high priority on jobs, economic performance and the markets the data clearly demonstrates which presidential administration has performed best.  And shows a very clear trend one can expect to continue into 2015.

Economically, President Obama's administration has outperformed President Reagan's in all commonly watched categories.  Simultaneously the current administration has reduced the deficit, which skyrocketed under Reagan.  Additionally, Obama has reduced federal employment, which grew under Reagan (especially when including military personnel,) and truly delivered a "smaller government."  Additionally, the current administration has kept inflation low, even during extreme international upheaval, failure of foreign economies (Greece) and a dramatic slowdown in the European economy.

Curly, Moe and Larry will just grumble and moan that Forbes is 'librul rag'...wait...what?

[Gaspar]

The only difference is that Reagan was very successful in making policy and getting it passed through Congress.  He actually worked well with Democrats and did some great bi-partisan work.

Obama had a sympathetic congress for his first two years and the policies he was able to enact were less than economically popular.  He has never had any ability to work across party lines because all he is equipped to do is make decree, demand and threat. 

So, basically this shows that an Obama incapable of getting his polices passed is equal to a Reagan successful in getting his party's policies passed. 

Funny to watch the Dems grumble about not being able to get any thing done, then stand up and say "look what we did!"

It seems that liberal policy works very well when it fails to pass.

[guido911]

Oh good grief. Obama>Reagan.

[guido911]

Love the part about deficit reduction...

[RecycleMichael]

So funny to read gaspar and guido try and explain this. Your non-stop criticisms of Obama and the economy sure sound hollow now.

Shall we go to the way back machine and show your follies?

[Conan71]

Here's where I get confused on the state of Obamanomics:

In light of this high employment participation rate, more Americans than ever are on food stamps:

Odd Trends: More Americans Remain on Food Stamps, Post-Recession

In the four years following the end of the downturn in 2009, the number of SNAP recipients increased by 7.3 million. Moreover, the percentage of the population receiving food stamps increased from 13 percent to 15 percent. To give perspective on this number, we can compare the recent recovery with the recovery after the recession of the 1980's, whose duration and unemployment levels are most comparable. Adjusting for population, in the four years following the 1981-82 recession, there was a 12.5 percent decline in food stamp recipients. In the four years following the 2007-09 recession, SNAP recipients increased by 15.6 percent. Were this recent recovery to have behaved similarly to that of the 1980's, by 2013 only 11.5 percent of the population would have been receiving SNAP benefits: 36 million individuals as opposed to 47.6 million. That is not a small difference.

By itself, SNAP benefits may not be enough to reduce the incentive for a recipient to go to work, or to move from part-time to full-time regular employment, but when combined with unreported earnings or other assistance programs -- perhaps most notably unemployment insurance benefits – the program does appear to allow a significant number of adult recipients to remain out of work longer than they might otherwise. Without some effort to require these SNAP recipients to participate in employment programs such as those offered under TANF, I fear that the number of non-working, nonelderly, nondisabled SNAP recipients will remain high.

http://townhall.com/tipsheet/kevinglass/2014/08/03/odd-trends-more-americans-remain-on-food-stamps-postrecession-n1874227

And Obama requested increases in welfare expenditures in his FY 2015 budget proposal. 

The Obama administration's proposed budget, released to Congress Tuesday, includes increased spending on education and welfare.

President Barack Obama unveiled his 2015 budget proposal Tuesday, calling for increased spending on welfare with increases in education and research paid for by closing tax loopholes for the wealthy ahead of heated midterm elections.

http://www.usnews.com/news/articles/2014/03/04/obama-budget-boosts-welfare-spending-ahead-of-election

You'd think with all this new-found job prosperity, we'd be spending less on welfare programs, or maybe that's not how things work any more.  I must be some sort of anachronism.

[Conan71]

So funny to read gaspar and guido try and explain this. Your non-stop criticisms of Obama and the economy sure sound hollow now.

Shall we go to the way back machine and show your follies?

It's really quite simple. 

When success happens under our guy's watch, it's all his doing.  When it happens under your guy's watch, he didn't have a thing to do with it.

When the smile hits the fan, our guy had nothing to do with it.  When it's your guy, his fingerprints are all over it.

Capisce?

[guido911]

So funny to read gaspar and guido try and explain this. Your non-stop criticisms of Obama and the economy sure sound hollow now.

Shall we go to the way back machine and show your follies?

Explain what? That Obama is a better jobs creator than Reagan? Obama's deficit reduction is better than Reagan? I am just laughing about it.

[RecycleMichael]

Glad you can laugh. I am laughing too, probably just for a slightly different reason.

[heironymouspasparagus]

The only difference is that Reagan was very successful in making policy and getting it passed through Congress.  He actually worked well with Democrats and did some great bi-partisan work.

Obama had a sympathetic congress for his first two years and the policies he was able to enact were less than economically popular.  He has never had any ability to work across party lines because all he is equipped to do is make decree, demand and threat. 

So, basically this shows that an Obama incapable of getting his polices passed is equal to a Reagan successful in getting his party's policies passed. 

Funny to watch the Dems grumble about not being able to get any thing done, then stand up and say "look what we did!"

It seems that liberal policy works very well when it fails to pass.

If you count two of the largest tax increases in the history of the world as successful.

And grant amnesty to millions of illegal aliens as successful.

And commit massive criminal activity with all the Iran/Contra issue (the policy part - supplying Iran with weapons).  Wildly successful.  You remember that - the one that our Great American Hero Oliver North was anointed after being convicted.  Twice.


Just think how much better off we could be if there were a real Congress in place that would do it's job!

[heironymouspasparagus]

Love the part about deficit reduction...

Reality is a real b$tch, ain't it... gotta really sting!

[heironymouspasparagus]

Here's where I get confused on the state of Obamanomics:

In light of this high employment participation rate, more Americans than ever are on food stamps:

Must be nice not to have felt the effects that the other 98% feel...employment growing at better than Reagan rates, but wages actually decreasing.  Consider yourself 'special'....

All we need now is a decent increase in minimum wage to make the whole thing work even better - as it always has in the past, regardless of the mindless pablum the Hannity/Limbaugh/O'Reilly/Drudge feed you....

[Conan71]

Must be nice not to have felt the effects that the other 98% feel...employment growing at better than Reagan rates, but wages actually decreasing.  

Take him to the wood shed, RM.  He's off the reservation.

You heard it here first: "Wages decreasing under Obama".

What happened to Obama's promises that under his watch the middle class was going to rally and take America back?  As of labor day, crazy Uncle Joe was saying it's time for the middle class to take back America.  I thought they did that when they elected Obama 

[heironymouspasparagus]

Take him to the wood shed, RM.  He's off the reservation.

You heard it here first: "Wages decreasing under Obama".

What happened to Obama's promises that under his watch the middle class was going to rally and take America back?  As of labor day, crazy Uncle Joe was saying it's time for the middle class to take back America.  I thought they did that when they elected Obama 

You cannot possibly be that obtuse - I have been saying for a long, long time that wages have been decreasing for 40+ years.  Hence the comparison that shows the minimum wage decreasing by more than 30% in real terms since 1968.  Dissemination.  Deflection.  The Script.  Still need a lot of 'recovering'....

A period of time - 46 years - where we have had Republicans for well over half the time.  28 years versus about 18 so far of Democrats. 

And you do remember that chart a few months ago showing how the economy in general always does better with Democrats in office - for about the last 75 + years.  That's gotta sting, too....

As for taking back America, well that's a nice dream and an ideal to be pursued, but made doubly difficult by the fact that corporate America has bought and paid for Congress.  If we could figure out a way to get to the point where money was not the same as "free speech", there might even be a chance.  Well, except in Oklahoma - we gotta have our Inhofe's....