NFP growth over 500,000 in historical perspective

Reader Rick Stryker wrote:

It’s a good thing Mitt Romney didn’t criticize Biden’s economy by saying we should see a 500,000 job increase, because that would have made another multi-year rant from Menzie that this is impossible!!!

Mr. Rick Stryker mischaracterized what I wrote. I said 500,000 is an unlikely number for a recovery month, and I support that, even if we cross 500,000 represents growth in the labor force. Below spawned my May 2012 post:

Governor Romney said the 500,000 monthly job opportunities he expects as normal during the recovery [1]. This actually happened last time in May 2010 but it is very rare. reader Rick Stryker He argues that 500 thousand should be expressed in percentage terms, taking into account the volume of employment. However, breaching the equation in terms of percentage never occurred during the eight years of George W. Bush’s administrations.

Figure 1: Month-to-month growth rate (log variances, non-annual) in nonfarm payroll employment, sa (blue), and 500,000 monthly change, expressed as a percentage from 2012M04 NFP. Source: April issue of BLS, via FRED.

In fact, over the past 21 years or so, one has to go back to the Clinton administrations to find such numbers.

Incidentally, unemployment has been 4% or less than just 11 times in the last 40 years (primarily at the end of the Clinton administration).

Here is an updated graph:

Figure 1: Monthly NFP growth rate (in blue), 500K change in non-farm payrolls expressed as a percentage of NFP in April 2012 (red line). Dashed sky blue line in April 2012, as Governor Romney made his statement in May 2012. The National Bureau of Economic Research has identified peak-to-trough recession dates shaded in grey. Source: BLS, NBER, and author accounts.

Between Mr. Stryker’s 2012 comment, and May 2020, there were no exact occurrences of over 500,000 NFP growths (expressed as a proportion of NFP).

If one wishes to stress that the past two years constitute a typical recovery, I would guess one could say that 500,000 is “normal”.

Related Posts

Leave a Reply

Your email address will not be published.