Economic Growth

Total Employment Change Each Quarter

Most often the unemployment rate gets reported in the national news. But the unemployment rate gives very unsatisfying view of the economy because it is made of too many variables. For example those who lose faith and give up looking for jobs are not listed as unemployed. In contrast, since employment varies cyclically the BLS typically lists "seasonally adjusted data." This also leaves something to be desired.
To escape these two downfalls we have already looked at annual growth rate. Annual growth eliminates the problem of seasonal cycles but fails to indicate variations shorter than a year. One possible approach would be to report seasonal change relative to the same season in previous years. With this we can historically normalize our change, yet still escape the pitfalls of unemployment and seasonal adjustments.
For simplicity we will look at the rate of employment change by quarter
In the first quarter the Christmas shopping season ends, and people hunker down for the cold of winter. Not surprisingly, there is a consistent drop in employment during this quarter. Some first quarters proved to be more severe than the trend. (1973 Ford, 1991 Bush Sr., 1982 Reagan, 2002, 2003, 2008 GW Bush). On the other extreme, some first quarter losses were noticeably less severe than the trend (1984 Reagan, 1978, 1979 Carter, 1976 Ford.) One might also notice that for the first quarter, both Carter and Clinton consistently beat the trend.
In the second quarter as nature warms up the economy warms up. Although the second quarter tends to be predictable some years are still recognizably low (1970 Nixon, 1980 Carter, 1982 Reagan, 2001, 2002, 2003 GW Bush) Some years are clearly above the trend (1977, 1978 Carter, 1983, 1984 Reagan) Again, the Clinton years perform with or above the trend.
The third quarter proves highly volatile. Here, the JFK, Johnson years stayed safely high. Bush Sr, and GW Bush years were consistently in loss, and the other presidents presided over unpredictable trends.
The fourth quarter starts the Christmas shopping season. It tends to remain predictably positive. Yet some years are noticeably negative (1974 Ford , 1981, 1982 Reagan, 1990 Bush SR, 2001, 2008 GW Bush. The Johnson and Clinton years maintain or beat the trend.

Normalized Data
The seasonal variations are large but contain predicable cycles. As a result we can normalize (adjust) each quarter to its seasonal cycle. To do this for each quarter we take the 30 year average. We then compare each quarter to its 30 year average. A quarter significantly higher than its 30 year average is showing an economic surge. If the quarter is significantly less than its 30 year average we see an economic slow down.

Once normalized the pattern becomes quite striking. Nearly all of the Bush, and GW Bush quarters were below the norm. Nearly all of the Clinton quarters were above the norm. Reagan started with a long deep recession but ended above the norm.

We look for the best and worst quarters, or compare quarters across presidencies.
Here we look at the best, average, and worst year for each president. Are there any implications about domestic policies or other challenges?
First Quarter
Clinton's worst first quarter was better than Reagan, Bush SR, and GW Bush average first quarters. Carter's average first quarter was better than both Bushes best first quarter.
Second Quarter
Clinton's worst second quarter was better than both Bushes average second quarter. Both Bushes best second quarters were well below all the other president's average second quarters.
Third Quarter
Clinton's and Carter's worst third quarter was about tied with Bush SR's average which were all better than GW Bush's average. Both Bushes best third quarters were well below all the other president's average third quarters.
Fourth Quarter
Carter's worst 4th quarter was better than Both Bushes best fourth quarter, as well as Reagan's average 4th quarter. Clinton's worst 4th quarter was better than both Bushes average 4th quarter.
For annual job growth the best years occurred under Carter (5.1%), Reagan(4.2), and Clinton (3.4%). Carter, Reagan, and Clinton's averages beat both Bushes Best. Clinton's worst year beat both Bushes averages.

Last modified June 22, 2009




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