The October employment report, released last Friday, undermines partisan claims that President George W. Bush’s economic record resembles that of Herbert Hoover, who held the presidency during the Great Depression.
Nonfarm payroll employment increased 337,000 in October according to the U.S. Bureau of Labor Statistics. The latest jobs report also included upward revisions for September (139,000) and August (198,000). Total U.S. nonfarm employment now stands at 132,017,000. That’s only 371,000 jobs less than in January 2001 when President Bush was inaugurated and 475,000 less than in February 2001, his first full month in office.
The economy has added 2.2 million new jobs since employment reached a trough in August 2003. If employment grows over the next three months at the same rate it has since last August — 159,143 new payroll jobs a month — President Bush will finish his first term with net jobs growth.
The Hoover analogy raised by critics has always been weak. In policy terms there is little in common between Hoover and Bush. Hoover raised tax rates, meddled with the market by trying to prevent prices from falling after the late 1920s bubble, increased the regulation of industry, and supported the protectionist Smoot-Hawley Act.
President Bush, by contrast, cut tax rates in response to the 2001 recession, let market forces determine prices after the late-1990s bubble, supported deregulation, and — with the exception of ill-advised steel tariffs — has generally avoided protectionist nostrums.
This did not stop congressional Democrats and media critics from relying on the Hoover analogy this year. The Media Research Center cited several examples in a recent report. On CBS, Dan Rather stressed, ìIt’s the first net job loss on a president’s watch since Herbert Hoover during the Great Depression of the 1930s.î The Washington Post said that Bush has been left ìin the position of being the first president since Herbert Hoover not to have produced job gains during his first term in office.î
These claims, made before the release of the October jobs report, appear now in a much different light. Yet the Hoover analogy has always been weak when the economic data is viewed through a nonpartisan lense.
Consider real gross domestic product (GDP). Real GDP contracted every year Hoover was in office. Under Bush, real GDP expanded in 2001, 2002, and 2003, according to the U.S. Bureau of Economic Analysis. It will also expand in 2004, leaving President Bush with a real GDP record that’s the exact opposite of Hoover’s.
Another broad indicator — nonfarm employment — fell by 8.7 million between 1929 and 1932, a decline of more than 25 percent under Hoover. By comparison, employment has declined by about three-tenths of 1 percent so far under Bush, with several months remaining in his first term. The employment decline under Hoover was massive. The job losses to date under President Bush have been miniscule in comparison.
Another indicator — disposable personal income — declined under Hoover but has increased under President Bush. So, real GDP, nonfarm employment, and disposable personal income all declined under Hoover. Under Bush, real GDP and disposable personal income have expanded, and if the recent jobs trend continues employment will also land in positive territory before the president’s first-term ends.
The data does not prove the Hoover analogy. Rather, it suggests that the silly season is finally behind us.
–Greg Kaza is executive director of the Arkansas Policy Foundation, a non-profit economic research organization in Little Rock.