Forbes: Obama Outperforms Reagan On Jobs, Growth And Investing

[Star]

.
Forbes: Obama Outperforms Reagan On Jobs, Growth And Investing
Adam Hartung
9/05/2014

<snip>

“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.”

<snip>

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.

Highlights by Star​

.

 

[shart_attack]

He's definitely makin' lotsa jobs, that's for sure, yeah.

I have a few relatives who have three or four of them apiece.

 

[DigitalDrifter]

This again ?

 

[DigitalDrifter]

And by the way, as I stated in the other thread on this, I'd sure like to see how badly Obama would have crapped his pants entering the White House with 19% mortgage rates.
That's how it was for Reagan.

 

[Peach]

The Fed controls interest rates.

 

[ClosedCaption]

He's definitely makin' lotsa jobs, that's for sure, yeah.

I have a few relatives who have three or four of them apiece.

Because the US is only as big as your eyes can see lol

Wamint...Isnt Forbes one of those liberal rags?

 

[DigitalDrifter]

The Fed controls interest rates.

Yes, so ?

Interest rates were so sky high because inflation was sky high by the end of the horrible Carter administration.

That's what Reagan had to take on. It took years to get over that. There was practically no construction going on, which had a domino effect. No new homes, means much fewer new furnishings, no new appliances, it was a very depressing climate.
As lousy as the economy has been for years now, I can only imagine how bad if inflation and high mortgage rates were also in the mix.

 

[Peach]

Reagan spent us into a middling recovery:

President Ronald Reagan:

President Reagan added $1.412 trillion in deficits during his two terms. He fought the 1982 recession by cutting the top income tax rate from 70% to 28%, and the corporate rate from 48% to 34%. He also increased government spending by 2.5% a year. This included a 35% increase in the defense budget, and an expansion of Medicare. Although $1.412 trillion doesn't sound like a lot, compared to 2012 debt levels, in fact Reagan's economic policies nearly doubled the debt during his Presidency.

 

[Iceweasel]

Economic Growth Obama Vs. Reagan Investing.com

Last week, Adam Hartung qualified for the "Mark Twain Award" if there was such a thing. In his article, "Obama Outperforms Reagan On Jobs, Growth & Investing," Adam goes to some length to try and show that unemployment rate, the S&P 500 and economic growth are currently better under the current administration than they were during the Reagan administration.
Adam's first mistake was in the use of the Bureau Of Labor Statistics measure of unemployment (U3) as a comparative benchmark of success as President. To wit:

"“President Obama has achieved a 6.1% unemployment rate in his 6th 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."

While this is "technically true," it falls within Twain's category of a "statistical lie."

The BLS's measure of unemployment has become obfuscated by the rise in the number of individuals that are no longer counted as part of the labor force. As I discussed in "Why The Unemployment Rate Is Irrelevant," the measure of labor force participation is markedly different between Reagan and Obama.

During Reagan's Presidency, workers that were unemployed longer than 52-weeks were still part of the labor force. This inclusion gave a more accurate measure of the relative size of the labor force overall. However, in 1994, Clinton removed individuals from the labor force that were currently unemployed for longer than 52-weeks. This adjustment immediately improved the overall measure of unemployment by shrinking the labor force by some 500,000 individuals. Since then, the number of individuals no longer counted as part of the labor force has swelled to more than 92 million individuals, or roughly 45% of the working age population (16-54) as of the end of 2013

In other words, a large part of the drop in the U-3 unemployment rate is due to the increase in the number of individuals excluded from the workforce. In theory, if the dropout rate continued at the current pace, the unemployment could fall towards zero allowing the Federal Reserve to win the battle of unemployment, but losing the war of economic prosperity.

The chart below shows the annual change in those not counted as part of the labor force by President from 1981-Present.

Workers Not In Labor Force
One of the arguments made by Adam is that the slack in the Labor Force Participation Rate is due to "Baby Boomers" retiring. This is hardly the case as I discussed in "Don't Blame Boomers For Not Retiring:"

"Recent statistics show that the average American is woefully unprepared for retirement. On average, 40% of American families are NOT saving for retirement, and of those who are, it is primarily about one year's worth of income. Furthermore, important to this particular conversation, one-fourth of those at retirement age postponed retirement with only 18% being confident of having enough saved for retirement.

With 24% of "baby boomers" postponing retirement, due to an inability to retire, it is not surprising that the employment level of individuals OVER the age of 65, as a percent of the working age population 16 and over, has risen sharply in recent years."

Employment 65-Over
This also explains that while the unemployment RATE has fallen to levels more commonly associated with full-employment, the actual levels of full-time employment have not risen. Critically, in an economy that is nearly 70% driven by consumption, it is ONLY full-time employment that leads to increasing levels of consumption, household formation and ultimately economic growth.

However, for the sake of argument, let's exclude all individuals OVER THE AGE OF 54 from the analysis so we can focus on those of working age 16-54. If the employment has indeed improved better under the Obama Administration then the level of full-time employment for the working age population should have improved markedly.

Employment FullTime
Unfortunately, that is not the case. At the end of Reagan's administration full-time employment relative to the working age population was at 51.98% versus 47.78% for Obama currently. However, following the recession in 1981, full-time employment under Reagan surged sharply as the real economy gained traction. This has not been the case as full-time employment has remained primarily a function of population growth and little else.

Adam also makes another critical mistake in his analysis using the stock market as a measure of economic performance. To wit:

"“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."

Again, it is a true statement but a "statistical fallacy."

The surge in the stock market since 2009 has not been a representation of underlying economic strength but rather a direct correlation to the expansion of the Federal Reserve's balance sheet. The chart below shows the level of excess reserves of depository institutions and the S&P 500 index by President.

S&P 500 and Excess Reserves
As you will notice, the surge in excess bank reserves beginning in 2009 has correlated with the surge in asset prices that is a benefit that the Reagan did not have. Therefore, to judge which President had better stock market performance we must extract the effect of the Federal Reserve interventions. The next chart shows, by President, the ratio of the S&P 500 Index divided by excess reserves at depository institutions.

S&P 500 Excess Reserves On Deposit
During the Reagan administration the stock market was growing at a rate faster than excess reserves which was a reflection of actual economic strength. Since 2009, growth of the stock market has only been a function of monetary interventions rather than broad-based economic prosperity.

Lastly, there is one point that must be considered. If we are truly going to compare President Obama to Ronald Reagan, it should be on the basis of a level playing field. As shown in the chart below, President Reagan's achieved real, inflation-adjusted, economic growth of 3.88% annually on average as compared to 2.04% under President Obama.

Reagan Vs Obama
This outperformance was achieved despite headwinds of an average interest rate nearly 5-times that of the current administration and an inflation rate that was more than double.

When considering that President Obama has been able to achieve real economic growth of just 2.04% annually despite historically low levels of inflation and interest rates combined with massive government interventions and balance sheet expansions; it makes his overall performance even more disappointing.

However, I do agree with Adam on his concluding point:

"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."

Clearly, the right answer was Reagan. Reagan, faced with skyrocketing inflation and interest rates, laid the groundwork that paved the way for a 20-year expansion of economic growth and prosperity. Unfortunately, as we move into the fifth longest economic recovery in history, there is little evidence such an economic "boom" is on the horizon.​

 

[DigitalDrifter]

Economic Growth Obama Vs. Reagan Investing.com

Last week, Adam Hartung qualified for the "Mark Twain Award" if there was such a thing. In his article, "Obama Outperforms Reagan On Jobs, Growth & Investing," Adam goes to some length to try and show that unemployment rate, the S&P 500 and economic growth are currently better under the current administration than they were during the Reagan administration.
Adam's first mistake was in the use of the Bureau Of Labor Statistics measure of unemployment (U3) as a comparative benchmark of success as President. To wit:

"“President Obama has achieved a 6.1% unemployment rate in his 6th 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."

While this is "technically true," it falls within Twain's category of a "statistical lie."

The BLS's measure of unemployment has become obfuscated by the rise in the number of individuals that are no longer counted as part of the labor force. As I discussed in "Why The Unemployment Rate Is Irrelevant," the measure of labor force participation is markedly different between Reagan and Obama.

During Reagan's Presidency, workers that were unemployed longer than 52-weeks were still part of the labor force. This inclusion gave a more accurate measure of the relative size of the labor force overall. However, in 1994, Clinton removed individuals from the labor force that were currently unemployed for longer than 52-weeks. This adjustment immediately improved the overall measure of unemployment by shrinking the labor force by some 500,000 individuals. Since then, the number of individuals no longer counted as part of the labor force has swelled to more than 92 million individuals, or roughly 45% of the working age population (16-54) as of the end of 2013

In other words, a large part of the drop in the U-3 unemployment rate is due to the increase in the number of individuals excluded from the workforce. In theory, if the dropout rate continued at the current pace, the unemployment could fall towards zero allowing the Federal Reserve to win the battle of unemployment, but losing the war of economic prosperity.

The chart below shows the annual change in those not counted as part of the labor force by President from 1981-Present.

Workers Not In Labor Force
One of the arguments made by Adam is that the slack in the Labor Force Participation Rate is due to "Baby Boomers" retiring. This is hardly the case as I discussed in "Don't Blame Boomers For Not Retiring:"

"Recent statistics show that the average American is woefully unprepared for retirement. On average, 40% of American families are NOT saving for retirement, and of those who are, it is primarily about one year's worth of income. Furthermore, important to this particular conversation, one-fourth of those at retirement age postponed retirement with only 18% being confident of having enough saved for retirement.

With 24% of "baby boomers" postponing retirement, due to an inability to retire, it is not surprising that the employment level of individuals OVER the age of 65, as a percent of the working age population 16 and over, has risen sharply in recent years."

Employment 65-Over
This also explains that while the unemployment RATE has fallen to levels more commonly associated with full-employment, the actual levels of full-time employment have not risen. Critically, in an economy that is nearly 70% driven by consumption, it is ONLY full-time employment that leads to increasing levels of consumption, household formation and ultimately economic growth.

However, for the sake of argument, let's exclude all individuals OVER THE AGE OF 54 from the analysis so we can focus on those of working age 16-54. If the employment has indeed improved better under the Obama Administration then the level of full-time employment for the working age population should have improved markedly.

Employment FullTime
Unfortunately, that is not the case. At the end of Reagan's administration full-time employment relative to the working age population was at 51.98% versus 47.78% for Obama currently. However, following the recession in 1981, full-time employment under Reagan surged sharply as the real economy gained traction. This has not been the case as full-time employment has remained primarily a function of population growth and little else.

Adam also makes another critical mistake in his analysis using the stock market as a measure of economic performance. To wit:

"“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."

Again, it is a true statement but a "statistical fallacy."

The surge in the stock market since 2009 has not been a representation of underlying economic strength but rather a direct correlation to the expansion of the Federal Reserve's balance sheet. The chart below shows the level of excess reserves of depository institutions and the S&P 500 index by President.

S&P 500 and Excess Reserves
As you will notice, the surge in excess bank reserves beginning in 2009 has correlated with the surge in asset prices that is a benefit that the Reagan did not have. Therefore, to judge which President had better stock market performance we must extract the effect of the Federal Reserve interventions. The next chart shows, by President, the ratio of the S&P 500 Index divided by excess reserves at depository institutions.

S&P 500 Excess Reserves On Deposit
During the Reagan administration the stock market was growing at a rate faster than excess reserves which was a reflection of actual economic strength. Since 2009, growth of the stock market has only been a function of monetary interventions rather than broad-based economic prosperity.

Lastly, there is one point that must be considered. If we are truly going to compare President Obama to Ronald Reagan, it should be on the basis of a level playing field. As shown in the chart below, President Reagan's achieved real, inflation-adjusted, economic growth of 3.88% annually on average as compared to 2.04% under President Obama.

Reagan Vs Obama
This outperformance was achieved despite headwinds of an average interest rate nearly 5-times that of the current administration and an inflation rate that was more than double.

When considering that President Obama has been able to achieve real economic growth of just 2.04% annually despite historically low levels of inflation and interest rates combined with massive government interventions and balance sheet expansions; it makes his overall performance even more disappointing.

However, I do agree with Adam on his concluding point:

"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."

Clearly, the right answer was Reagan. Reagan, faced with skyrocketing inflation and interest rates, laid the groundwork that paved the way for a 20-year expansion of economic growth and prosperity. Unfortunately, as we move into the fifth longest economic recovery in history, there is little evidence such an economic "boom" is on the horizon.​

Thank you, and I especially appreciate that last comment. I have often wondered how many young people of today that seem to think Obama is the first president to ever enter the White House with a less than perfect economy, realize what Reagan had to deal with.
As I like to mention often, if you were an adult during the Carter years, then you know what the true "feel" of the nation was. I've got to tell you, by 1978 it was like living in a black and white photo, with a constant gray cloud over everyone's head.

 

[Star]

.
Forbes: Obama Outperforms Reagan On Jobs, Growth And Investing
Adam Hartung
9/05/2014

<snip>

“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.”

<snip>

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.

Highlights by Star​

.

Republicans need to remind me, and themselves for that matter, why is Reagan the Republican's Saint Ronnie - I mean:

REAGAN RAISED INCOME TAXES 11 TIMES, OBAMA NEVER

OBAMA:
In fact, wound up being the largest tax-cutter in presidential history cutting $654 billion in 2011 and 2012 alone. He was in favor of letting the Bush tax cuts EXPIRE for the super wealthy, (which no, is not the same as a tax hike), but even that didn't come to pass. Romney in 2012 even admitted Obama didn't raise taxes.

Obama has consistently CUT taxes, not raised them.

REAGAN:
He got through a big tax cut once he took office. But to hear conservatives talk, that's where the story ends. They forget he raised income taxes in 1982, 1984, 1985, 1986 and 1987.

Actually, he raised taxes 11 times to include four MASSIVE tax increases!

and

REAGAN:
I believe in the idea of amnesty for those who have put down roots and lived here even though sometime back they may have entered illegally.
-Ronald Reagan 10/28/1984

OBAMA:

No matter how decent they are, no matter their reasons, the 11 million who broke these laws should be held accountable.
-Barack Obama July 2010

Made that up, did I? Watch it yourself​

.

 

[Stephanie]

what now, fifth thread on this?

desperation

 

[pinqy]

During Reagan's Presidency, workers that were unemployed longer than 52-weeks were still part of the labor force. This inclusion gave a more accurate measure of the relative size of the labor force overall. However, in 1994, Clinton removed individuals from the labor force that were currently unemployed for longer than 52-weeks.

That is absolutely untrue and a simple look at the BLS site would have proven that.
Employment Situation Technical Note

People are classified as unemployed if they meet all of the following criteria: they had no employment during the reference week; they were available for work at that time; and they made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons laid off from a job and expecting recall need not be looking for work to be counted as unemployed. The unemployment data derived from the household survey in no way depend upon the eligibility for or receipt of unemployment insurance benefits.

There is no, and has never been any, time limit on being classified as unemployed. It wouldn't make any sense to have one.

Or, more simply: A-35. Unemployed total and full-time workers by duration of unemployment where we see 2.1 million unemployed 52 weeks or longer.

What you were mislead by was that the definition of "Discouraged Workers," those who want a job, are available for work, have not looked previous 4 weeks (and therefore not unemployed), and quit looking for work because they believed they would find no work, was changed from no time limit to having to have looked in the previous year. This had no effect on the UE rate or Labor Force Participation rate because Discouraged were already Not in the Labor Force.

The reason a time limit for Discouraged, and the newly created Marginally Attached (same definition as discouraged except quitting can be for any reason) is that those who have not looked for work in more than 6 months are no more likely than those who say they don't want a job or can't take a job to start looking for work.

The searching for work requirement has always been part of the definition of unemployed.

The ONE difference in the unemployment definition was that before 1994 people who had been hired but not yet started work were classified as unemployed regardless of whether they looked for work in the last 4 weeks. That exception was removed.

 

[Star]

He's definitely makin' lotsa jobs, that's for sure, yeah.

I have a few relatives who have three or four of them apiece.

Do your relatives lack giddy up or are they to stupid or to poor to get an education or-----or are they just enjoying George Bush's America?

George W. Bush: “You work three jobs? Uniquely American, isn't it? I mean, that is fantastic that you're doing that."

To a divorced mother of three, Omaha, Nebraska, Feb. 4, 2005”
.

 

[shart_attack]

He's definitely makin' lotsa jobs, that's for sure, yeah.

I have a few relatives who have three or four of them apiece.

Do your relatives lack giddy up or are they to stupid or to poor to get an education or-----or are they just enjoying George Bush's America?

George W. Bush: “You work three jobs? Uniquely American, isn't it? I mean, that is fantastic that you're doing that."

To a divorced mother of three, Omaha, Nebraska, Feb. 4, 2005”

Do your relatives have senses of humor?

Do they ever say anything funny?

You sure as hell don't. That's for sure.

 

[Stephanie]

Back in the day people worked how many jobs they had to take care of themselves and their families

now look at them today. they can't work one without crawling onto the taxpayers backs through guberment assistance

 

[Flopper]

And by the way, as I stated in the other thread on this, I'd sure like to see how badly Obama would have crapped his pants entering the White House with 19% mortgage rates.
That's how it was for Reagan.

And it would have been interesting to see how Reagan would have performed had he entered office facing the worst recession since the great depression.

 

[Star]

Back in the day people worked how many jobs they had to take care of themselves and their families

now look at them today. they can't work one without crawling onto the taxpayers backs through guberment assistance

-pewsh!-
Who are you trying to kid - yourself?
Back in the day, i.e. pre-Reagan, before we began redistributing wealth upwards, before we began outsourcing our manufacturing, when Davis-Bacon was honored, when unions represented ¼-⅓ of us... a household could live a pretty good middle class lifestyle on one income.
.