Barack Obama likes to tell people that we should thank him for his interventionist economic policies, and that without them, unemployment would be much worse in the US than it is now. For instance, he told Racine that without his economic stimulus, we’d be at 12, 13, even 15% — even though Racine itself is at 14.2% unemployment. D’oh! Otherwise, this looks like a classic Churchill conundrum. Had the UK elected Winston Churchill as Prime Minister in 1936 and he fought Hitler early, forcing him from power, would Churchill have gotten credit for saving Western civilization? Or would he have been seen as a war monger, without the context of tens of millions of dead people in World War II?
Actually, we can test the hypothesis in this case, at least to some extent. The financial collapse also battered our northern neighbor, Canada, although not quite to the same extent it did us. (Canada has more conservative banking and lending policies, which shielded them from the worst of the problems.) Instead of using a blizzard of government spending to correct a downturn in unemployment, Canada tightened its belt and rode it out.
So how do the two compare? First, let’s look at the US levels of civilian employment since January 2007, eleven months before the recession started, to see how we’re doing:
As before, the red star denotes the passage of Porkulus. Since that point in time, employment sharply declined for most of the year, plateaued, and then rose a bit before falling off — but the rise was minimal.
How did Canada do without massive government stimulus spending? Well …
Employment rose by 93,000 in June, pushing the unemployment rate down 0.2 percentage points to 7.9%. This is the first time the rate has been below the 8% mark since January 2009.
Employment has been on an upward trend since July 2009, increasing by 403,000 (+2.4%). These gains offset nearly all the employment losses observed during the labour market downturn which began in the fall of 2008. The June unemployment rate, however, remained well above the October 2008 rate of 6.2%, due to a large increase in the number of people in the labour force over this period.
For those who have trouble recognizing it, that’s what a recovery looks like. Canada’s job creation really has gone in the right direction, not simply plateaued at the nadir of the curve. Maybe Canada’s private sector has been hiring because it doesn’t have to worry about the price signals of the massive government interventions created by the Obama administration that the US private sector has to deal with. (via King Banaian)
Update: Just to restate: the charts show the actual number of civilians employed, not percentages of the population. I understand the confusion; the first chart looks very similar to one I produced earlier this week looking at the percentage of civilian population participating in the workforce, whose similarity comes from obvious reasons, but is based on different data from the BLS.