This is my first time here. I'm also extremely green on politics. I know close to nothing about politics in general, and very little on talking points, to give you an idea.
I read an article that linked unemployment rates to a current president, and it caused me to be curious about how a residing president effects unemployment/employment rates.
In what ways can a (US) President affect country-wide job availability, if at all?
he doesn’t but we’re all really stupid so we blame and credit the bag of organs sitting in 1600 pennsylvania for global macroeconomic developments
congress sets fiscal policy and the fed runs monetary policy. short of starting a war, the president’s direct influence on unemployment is limited
This. A small percentage of the pop understands economics and how capitalism works. Most relate to it emotionally. Starting a war actually requires a congressional act, but presidents get around it often based on prior authority that was not rescinded. A bit like AZ's 1864 zombie abortion law.
technically congress is supposed to make laws and the judiciary is supposed to resolve disputes over said laws. but now 99% of both happen within the administrative agencies.
in 2024, the president can easily use the military to break things without asking congress. ask isis, libya, yemen, iran, and somalia if you want proof.
Concur, but using the military AND declaring war are different. Protecting national security (economic) interests doesn't rise to the level of war declaration. It might seem like a semantics argument, but putting the country on a war footing is a wholly different animal (greater commitment of personnel, material resources and capital). Fucking with Yemen, etc. is not the same. It is rather quaintly referred to as a "military action" which implies some short term or sporadic or intermittent intervention.
congress sets fiscal policy and the fed runs monetary policy. short of starting a war, the president’s direct influence on unemployment is limited
And also including gas prices, supermarket prices, education reform, immigration at the border, the exit from Afghanistan, the golf handicap of other players, etc.
Thank you for the education! I’m a bit more knowledged now
My understanding is that the decisions made by the Federal Reserve (to lower or increase the Federal funds rate/interest rate) have a much bigger effect on the short term unemployment rate, stock market, housing market, etc. than any sitting President does at the time.
The President has the power to influence Congress and sign their bills into law. But we often don't see the positive/negative effects of those bills until the next term.
Perfect example right now is our recent spike of inflation. A lot of that inflation was caused by the $2.2 Trillion stimulus plan from the CARES act. (https://en.wikipedia.org/wiki/CARES\_Act)
From the Federal reserve: (https://www.federalreserve.gov/econres/notes/feds-notes/fiscal-policy-and-excess-inflation-during-covid-19-a-cross-country-view-20220715.html)
"The previous section highlighted that fiscal support boosted goods consumption demand without any noticeable impact on the supply of goods. Hence, the large increase in demand triggered by the fiscal stimulus policy, together with the slow pace of adjustment in production, likely contributed to the current imbalance in the goods market, resulting in the depletion of inventories, pronounced bottlenecks, and ultimately inflation.
The steep surge in goods consumption in countries with large fiscal support may have also created extra demand in other countries through an increase in demand for imports. This demand surge was met by limited supply capacity. Indeed, while both production, transportation and shipping capacity have adapted to increasing global value chain participation over the past few decades, the necessary infrastructure appeared to be quite inelastic in the short run."
The CARES act was designed to help Americans (and corporations) stay afloat during COVID and it was signed into law by Trump in March 2020. But it takes a while for the negative consequences of something that huge to kick in. Which it did in 2021 under Biden, and so he got stuck with all the blame for it since the bad part only showed up under his term.
Most American's don't think of it this way. They just blame the people currently in power for the economic consequences of the the leaders that came before them. OR they blame current leaders for not fixing the old problem fast enough. But only the Federal Reserve can really make decisions that noticeably curb inflation in a short timeframe, which they are trying to do right now. Congress or the President can really only pass more spending bills, which has the potential to make inflation worse.
There are areas where a President has real power. In something like this, think of him/her as more of an "influencer"
Although one could argue the President doesn’t impact jobs nationally, there are many things the President can do that impacts jobs in certain industries.
Here’s one example: https://www.google.com/search?q=cancelling+Keystone+pipeline&ie=UTF-8&oe=UTF-8&hl=en-us&client=safari
There is a cumulative impact of decisions that is hard to measure.
Typically it’s more indirect impact than direct impact. So therein lies the political wrangling on ‘cause and effect.’
Mostly presidents affect economic growth on the margins. If the macroeconomic trend was already downward, it will remain so. Same with upward.
Over the past 50-75 years, the economy has performed modestly better under the democrats than the republicans even though the GOP is mostly perceived as the “pro-business” party. (https://www.epi.org/publication/econ-performance-pres-admin/#:~:text=There%20is%20still%20a%20pronounced,and%20interest%20rates%20are%20lower.)
In reality the economy is HUGE and mostly moves slowly. The best initiatives or government actions take years to play out in the economy.
So little that when they say it, it's so ridiculous that we almost believe them.
Congratulations - by even thinking to ask this question you have demonstrated greater political instincts than 95% of voters.
A major factor in job availability is fiscal policy. When the government spends a lot of money, that usually means it is hiring people. Or it provides stimulus to the population, which then increases consumer demand, which then increases employment.
John Maynard Keynes was an English economist who observed that the best policy in a capitalist system is to have the government stimulate the economy with spending during periods of slow economic growth, and then draw spending back when growth is high - because the extra investment isn't needed, and could be inflationary, and (theoretically) you can pay down the debt incurred from the prior stimulus. His theories were key to ending the Great Depression.
Keynesian economics are still practiced in broad strokes (see the American Rescue Act from 2021) but we have gotten really bad at the "pay down debt" part.
I know the company I work for has lower growth estimates under a democratic president largely due to the uncertainty around taxes.
Energy policy. The cheaper energy is, the cheaper goods move, the lower the prices, more consumption = higher demand. Higher demand = more jobs to provide for that demand.
Energy is very expensive now (though not as bad as 2021-2) and unemployment has consistently been very low.
Because unemployment does not include “underemployment” nor does it include people that have given up looking for jobs.
Yeah we've heard you people dutifully reciting this since 2010 when the job market started to improve under Obama. BLS cooks the books too, right?
44 million people age 16-64 are not in the labor pool - meaning they’re not counted in unemployment statistics. And that data is from BLS.
this is kinda a common misconception. BLS publishes several different unemployment rates, the one mostly common used is U-2. They also track labor force participation, etc. There's no "cooking the books".
One direct way a president can have an effect on employment is by hiring government employees. for example if Trump instigates all or part of "Project 2025" sweeping numbers of Americans will lose their jobs and the bad number go up.
That's firing, not hiring.
He can't just hire millions of people, in the other direction, because you have to have money to pay them, which Congress has to approve. Unless they're happy to be "employed" for $0 salaries.
Okay? If part of a president's agenda is to increase the size of the government they will of course need congress to approve the spending, it is still a way a president can directly affect unemployment.
It's not "direct" if you have to involve congress, since they might just say no, or have a million edits. (pretty much guaranteed). So thus you can't really interpret very much about the president for failing to do that.
The economy is a car on a highway. The president is one of a hundred hands on the string wheel and he can only slow or speed up the car by +- 10 mph.
Almost none. Appointing a chairman of the Fed is the main one. Which is very indirect. And theoretically signing vs vetoing bills related to employment, but that has to be in conjunction with Congress.
The president can direct trade policy witch can have a large effect positive and negative effect on the economy.
A president can incourage certain public policies through his positions and influence the direction of policies
From an economic point of view, the Federal Reserve has a lot more direct power over the economy than the US President
I'd like to add that the president does control the executive. So he could create more jobs through private contracts or opening up more jobs in the executive. I remember Clinton helped the budget by laying off a bunch of government workers and not filling positions.
Not too much, but a few ways, all of these effects are fairly minor:
-Budgetting and Spending: The fed govt is a huge employer, more federal workers lowers the unemployment rate.
-Military: Similar to above, active duty military are employed. Larger military, less unemployment.
-Prisons and Criminal Justice: People in jail or prison are not counted against the most commonly quoted unemployment rate.
-Regulatory state: the pres. technically runs the regulatory state, which could impact employment in various ways.
-Countercyclical stimulus: Typically, during recessions, congress will pass stimulus bills and the president will sign off.
Probably a few others. In general, people assume presidents have too much power over the economy.
A president doesnt have a lever to pull to affect unemployment, but he sets the tone/vibe. So when a president comes in screaming about pro growth and less regulation, businesses that may be on the fence may pull the trigger on new hiring or supply purchases. Anyone in business November 2016 saw an increase in orders unless they were just failing anyway.
Change it up, new president says gas and oil are going to be a thing of the past, x number of projects arent going to happen so less oil and gas supply.
It has an effect, but not as great as The Fed.
Not preparing for a pandemic cost America twenty million job losses in a month.
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