President Obama and his supporters are certainly happy to see the news that “nonfarm-payroll employment” grew by 227,000 positions in February. Gene Epstein of Barron’s reminds us that history would have predicted much better gains.
The private-sector three-month average gain of 251,000 still pales in percentage terms compared with gains following previous severe recessions. It comes to an increase of 0.7%. In contrast, the three-month gain ran 1.7% in both February 1976 and February 1984, which followed the serious economic downturns of 1974-75 and 1981-82.
Similarly, February 2012 marked the 32nd month since the end of the 2008-09 recession. By the 32nd month following each of those two previous recessions, private-sector employment had exceeded its previous peak months before. Now assume that 251,000 over the past three months continues. It will still take another 20 months — by October 2013 — for private-sector employment to exceed the previous peak.
Before the president’s partisans get too excited about the recovery, they ought to consider how much more growth we would be seeing now had he adopted policies that promote savings, work, and investment — rather than misguided stimulus spending and cronyism.
