Here’s a typical story you’ll see on the campaign trail :

President Bush’s re-election campaign, seizing on good economic news, unveiled a television commercial Friday that emphasizes job growth and criticizes senate rival John Kerry as a pessimist.

“After recession, 9-11 and war, now our economy has been growing for 10 straight months,” the ad says. “John Kerry’s response? He’s talking about the Great Depression. One thing’s sure: Pessimism never created a job.”
. . .
Bush’s new ad highlights the president’s own economic record, as the campaign works to promote an improving economy and shift the focus from Iraq.

Seizing on the fact that the economy is one of voters’ top issues, the ad claims that Bush enacted the “largest tax relief in history” and boasts that under his leadership there has been record homeownership, low inflation and low interest rates, and 1.4 million jobs created since August.

The 1.4 million figure was calculated based on Friday’s Labor Department announcement that U.S. employers added almost a quarter million workers in May. The department released the numbers at 8:30 a.m. The new ad was posted on the campaign’s Web site at 11 a.m.

But as Thomas Schaller explains over at the Gadflyer, those 1.4 million jobs aren’t exactly something to brag about :

That sounds nice, but here?s the catch: Because population growth requires the economy to produce about 150,000 jobs per month ? a point Kerry adviser Tad Devine tried to explain to Judy Woodruff on CNN today ? that means that the Administration must create more than 150,000 jobs each month outpace the expanding size of the employable national workforce, thereby creating net new jobs and lowering the unemployment rates.

Those rates are holding steady, which should raise flags in the media. For the innumerate scribes out there, the math is so simple you can do it without removing your shoes:

Because 9 x 150,000 is 1.35 million, and because subtracting this figure from 1.4 million yields the miniscule total of 50,000 jobs, the president?s policies during the past three quarters have created an average of fewer than 6,000 net new jobs per month during the past nine months above and beyond the jobs needed to meet an expanding employable population.

Let me touch on that second to last paragraph there. When you hear people praise Bush’s work on the economy, notice that they keep coming back to “jobs created”. There’s a good reason for that since the past few months have been really good for Bush on that front :

That’s a pretty dramatic spike up, especially if you consider that the number of jobs has been going down for almost all of Bush’s presidency. But one thing you don’t hear them talk about as much is the unemployment rate. The reason for this is that all this magical job creation hasn’t really done much to change the number of people out there looking for work :



As an aside, I included two different lines on the chart above to point out something that doesn’t get a lot of attention. While the unemployment rate is “officially” 5.6%, the method for calculating this number leaves out quite a few people. Here’s the explanation from the BLS :

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)

U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers

NOTE: Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

And if you think under-counting the number of unemployed and a stagnant unemployment rate relative to job growth are Bush’s only worries, let me point you to some posts by my fellow bloggers that shed even more light on how the economy is really doing.

Brad DeLong points out that the fruits of the economic recovery aren’t making a dent in the compensation gap. (via Kevin Drum)

As a share of the economy labor compensation has not been this low in almost 40 years (since 1966), and after-tax corporate profits are at the highest levels ever recorded by the Bureau of Economic Analysis. Since its peak in 2001, as a share of gross domestic product (GDP), labor compensation has decreased by about 4 percent (from 67 to 63 percent) and corporate profits have increased by about 4 percent (from 8 to 12 percent) ? see chart below. After taxes, corporate profits reached 9.6 percent of GDP ? the highest level recorded dating back to 1947.

Billmon reminds us that wage growth is still lagging behind inflation, so even if you have a job, your dollars aren’t buying as much as they used to.

Nathan Newmann strengthens DeLong’s point by comparing the current recovery to previous ones. Unlike the last eight times we’ve had to pull ourselves out of an economic slump, this time we don’t have any major compensation or wage increases to look forward to.

The Center for American Progress pointed out in March that even with jobs being created, the quality of those jobs leave a lot to be desired :

According to government statistics “of 290,000 private-sector jobs created since April 2003, most – 215,000 – have been temporary positions.” Last month, employment in the private sector would have fallen “without the creation of 32,000 temporary jobs in the professional and business services sector.” Some economists think “that Mr. Bush’s tax incentives for business investment, which allow for 50% depreciation in the first year on most business equipment, may have temporarily helped tilt the balance in favor of spending on equipment instead of new permanent workers.”

Bush is fond of telling people that “pessimism never created a job”, but from where I’m sitting, optimism isn’t faring much better.