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Obama’s claim that businesses are in the ‘longest uninterrupted stretch of job creation’

(Pool photo by Saul Loeb via European Pressphoto Agency)

“Our businesses are in the longest uninterrupted stretch of job creation in our history.”

— President Obama, statement on the Islamic State, Sept. 10, 2014

During Obama’s address to the nation on the threat posed by the terrorist group that calls itself the Islamic State, he suddenly turned to domestic issues and offered this interesting claim. Is he correct?

The Facts

First, note that the president referred to “businesses.” That means he is not talking about all jobs being created, including state or federal government positions, but jobs created by the private sector. If you go to the Bureau of Labor Statistics Web site and plug in the data, you will indeed see 54 straight months of job gains in the private sector, after the dizzying drops in the Great Recession.

Moreover, going back as far as the Labor Department kept such statistics (1939), it’s clear there has never been a period this long without a decline. (Some might quibble about Obama’s use of “history;” it is certainly as long as such records have been kept.)

Still, when you exclude a single month of decline, you will see that Presidents Bill Clinton and Ronald Reagan had streaks of 85 and 71 months, respectively.

In Clinton’s case, that one-month blip stemmed from a massive blizzard that struck the East Coast in January 1996. In Washington, the impact of the blizzard was so bad that Clinton had to shut down the federal  government for a week.

The net result on job creation was a monthly nationwide decline of (just) 2,000 jobs. That month was clearly an anomaly because 129,000 private-sector jobs were created the month before — and 397,000 the month after.

A White House spokesperson countered that the past 54 months have included more than its fair share of unexpected headwinds, including international events such as the European sovereign debt crisis, the 2011 tsunami and nuclear accident in Japan, and the disruption of Libya’s oil supply; extreme weather such as Hurricane Sandy in 2012 and this year’s coldest winter since the 1970s; and the government shutdown in October 2013. So the argument is that private-sector job creation kept going despite those obstacles.

There is another caveat: The average number of jobs created in this period is significantly lower than in either the Clinton or Reagan period, as shown in this Tableau interactive chart created by Wall Street Journal reporter Matt Stiles. As he noted, the average monthly gain during this period is in the bottom half of the 17 jobs recoveries lasting 12 months or more in the past 75 years, with an average of 186,000 jobs created every month. By comparison, the periods in the Reagan and Clinton eras generated at least 240,000 private-sector jobs a month.

The White House, however, argues that such comparisons are a bit facile. For instance, the 1980s expansion was aided by the fact that millions of women surged into the labor force, while the current period has been hampered by the wave of retiring baby boomers.

The current period has also been notable for the huge cutbacks in public-sector jobs, which the White House argues makes the private-sector job performance more impressive. (New jobs in the public sector, and the resulting paychecks, obviously help generate additional private-sector jobs.) So the White House argues that the continued private-sector growth, in the face of massive public-sector cutbacks, is especially significant.

Here’s a chart, from the Calculated Risk blog, that shows the decline in public-sector jobs under Obama, compared with other presidents. Obama is the only recent president under whom cumulative public-sector job creation is negative.

The Pinocchio Test

While some might argue that Obama’s statistic is based on a technicality — and that the pace of job creations lags many other periods of extended growth — the fact remains that the president’s assertion is correct. He also appropriately prefaced his statement with a nod to the fact that the recovery has been sluggish: “for all the work that remains.”

Thus, even with the possible caveats we noted, he earns a rare Geppetto Checkmark.

The Geppetto Checkmark

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