President-elect Trump made big promises on the campaign trail. Although we do expect some pro-growth policies to be enacted in 2017 and help spur job gains, including corporate tax reform and fiscal stimulus, some of the president-elect’s lofty goals may not be attainable. One of his promises is to create jobs….a lot of jobs. We expect a solid number of jobs to be created over the next four years, especially over the next two, where we have greater visibility. But can Donald Trump be the greatest job-creating president in the modern era? It is possible but a long shot. Here we offer some perspective.
Figure 1 shows the job creating records of the past 15 post-WWII presidential terms. Looking at total jobs created, Bill Clinton is the king with 11.65 million jobs created during his first term (followed closely by 11.58 million during his second term). Clinton benefited from overseeing one of the greatest economic and stock market booms in history, and excellent timing, taking over when the economy was just getting going after the 1990-1991 recession and leaving office at the peak of the dot-com bubble. Not taking anything away from Clinton, but he got a lot of help from the business cycle (as did Carter, Reagan in his second term, and President Obama).
If we look at percentage growth in the labor force rather than the number of jobs added, LBJ is the king. During his term from 1965-1968, the labor market expanded by 16.5%, ahead of Carter (13.0%) and Reagan’s second term (11.2%), and well ahead of Clinton’s two terms (10.6% and 9.6%).
So what type of job creation must Trump deliver to be considered among the greatest job creating presidents of all time? During his 48 months in office, if job growth totals 242,730 per month, Trump would match Clinton’s first term with 11.65 million new jobs. That’s a reasonable number—monthly job growth averaged 229K in 2015 and 251K in 2014—but one that would require acceleration from the recent sub-200K pace. That goal would be much more difficult should the U.S. economy enter a recession at any point during the next four years, something we would say may be as much as a 50/50 probability given the age of the business cycle. Bottom line, given where we are in the cycle the odds that job growth reaches those levels under Trump are fairly low at this point even with the right policy prescription.
We can say with certainty that LBJ’s record of 16.5% labor force growth during his 1965-68 term is out of reach. The number of jobs that would have to be created per month to hit that target? 465K—a level reached in just four months since 1990.