"Unemployment has fallen from 10 percent during the president’s first year in office to 8.5 percent today."
Hank Johnson on Wednesday, January 25th, 2012 in a press statement
Spin on economy data leads partisans to opposite conclusions
Minutes after President Barack Obama’s State of the Union address last week, the Washington chattering class spun like a cartoon Tasmanian Devil.
Republicans took to the airways, grumbling that Obama offered no real solutions to the country’s problems. Democrats cheered and said he had the answers.
Then came the spin typical of any major political event, whirling with facts and figures.
The economy’s better off since Obama took office, said U.S. Rep Hank Johnson, a DeKalb County Democrat.
"Unemployment has fallen from 10 percent during the president’s first year in office to 8.5 percent today," Johnson said in remarks posted on Patch.com’s local news site for Stone Mountain-Redan.
No, the economy’s worse, said U.S. Rep. Phil Gingrey, a Marietta Republican.
Three years into Obama’s presidency, "2 million more Americans are out of work," Gingrey said in a news release posted on Rome Newswire, an online news site covering the Rome area.
Can these both be true? Is it possible for unemployment to drop as the ranks of people who are out of work grow?
Because of this conundrum, we’ll depart from our usual Truth-O-Meter format and do a special doubleheader. We’ll check both stats and tell you whether one of them is wrong or whether it’s possible for both to be correct.
First, let’s consider Johnson’s unemployment statistic.
In January 2009, when Obama was inaugurated, unemployment stood at 7.8 percent. It peaked at 10 percent in October 2009, eight months later.
In December 2011, the rate stood at 8.5 percent.
Johnson’s numbers are accurate, but he runs into trouble when he said that "it is remarkable what President Obama has achieved in his first three years."
Labor economists have repeatedly told PolitiFact that it’s hard for any political leader to take credit or blame for something as complicated as the economy.
Johnson spokesman Andrew Phelan offered proof to bolster the congressman’s claim that Obama deserves credit for lower unemployment. He cited a November report from the nonpartisan Congressional Budget Office, which reviews bills that will have an impact on the federal budget. The American Recovery and Reinvestment Act of 2009, the stimulus legislation that Obama backed, lowered the unemployment rate by between 0.2 percentage points and 1.3 percentage points during the third quarter of 2011, the office determined.
Phelan also cited a 2010 report by a Princeton professor and the chief economist of Moody’s Analytics saying the Recovery Act and monetary policy reduced unemployment.
Still, other factors are at play. For this reason, Johnson’s statement earns a Half True.
Now on to Gingrey’s statement, where he says "2 million more Americans are out of work."
Gingrey spokeswoman Jen Talaber pointed us to a July check by our PolitiFact Ohio colleagues. It analyzed a television ad by the Republican National Committee criticizing Obama’s economic policies.
Since he took office, it said, "2 million jobs. Gone."
PolitiFact Ohio found that the drop in employment was actually more severe than the ad said. The economy lost 2.5 million jobs between January 2009 and May 2011, according to employment figures from the Bureau of Labor Statistics, which tracks employment and other economic data.
But the ad was missing a crucial piece of context. It neglected to mention that the economy gained 1 million jobs in the year before the ad came out. PolitiFact Ohio gave the claim a Mostly True.
Six months have passed since PolitiFact Ohio’s story ran, so we checked the latest employment statistics to see whether the figures were still correct.
We found that the country’s employment outlook is sunnier.
In December, there were nearly 132 million nonfarm employees in the U.S., down 1.66 million from January 2009. This means that Gingrey’s 2 million figure is some 20 percent too high.
We found a few other problems with Gingrey’s use of employment data.
When the economy loses nonfarm jobs, it does not mean that "2 million more Americans are out of work," as Gingrey said. The Bureau of Labor Statistics did not design this metric to measure how many people have become unemployed.
It’s likely many did get laid off. But others might have chosen to return to school, become stay-at-home parents or leave the workforce for any number of other reasons.
It’s also worth noting that while payrolls have declined since January 2009, they’ve been rising since October 2010, according to BLS data.
Because Gingrey’s claim cherry-picks unflattering data and his numbers could use some freshening up, we rate his statement Half True.
Now we come to the larger issue at hand. Gingrey and Johnson used valid data to give opposite impressions of the state of the economy. Their interpretations had some shortcomings but weren’t wholly incorrect.
So how is this possible? Can unemployment decline under Obama if payrolls shrank?
Yes. The reason is that Gingrey and Johnson used data from different time periods.
Gingrey chose to consider nonfarm payroll numbers starting in winter 2009, while Johnson started his unemployment count in October 2009.
The economy didn’t post its worst numbers until the latter half of 2009.
Between January 2009 and December 2011, the economy lost jobs. Nonfarm payrolls decreased by some 1.7 million jobs. As you’d expect, unemployment increased during the same time period from 7.8 percent to 8.5 percent.
But from October 2009 to December 2011, the economy gained jobs. Nonfarm payrolls actually rose by about 2.4 million. Unemployment dropped from 10 percent to 8.5 percent.
It’s easy to cherry-pick data that give opposite impressions of the nation’s economic health. With statistics, the devil’s in the details.