Private Sector Growth, Public Sector Decline Under Obama

A quick look at private sector and public sector job growth under President Obama:
Employment Obama public-private-page-001This is employment since January of 2009. Since the end of the recession, private employment has bounced back, while government employment has continued to fall. (The spike in government employment in April of 2010 is the census, not the stimulus). In May, the Brookings Institute estimated that the unemployment rate would be a full percentage point lower (7.1% instead of 8.1% at the time) if it weren’t for the decrease in government employment. This mornings job report puts the unemployment rate at 7.7% after an increase of 236,000 jobs. The trend continues with private sector jobs growing by 246,000 and public sector jobs shrinking by 10,000.  If government employment had not been cut, unemployment would likely be under 7 percent.

Now let’s look at a broader (put possibly less important) measure of economic activity; overall dollars spent on private consumption v. government consumption:

Obama public sector private sector spending GDP-page-001

The green line is federal government expenditures. The yellow line is federal +state and local expenditures. Both had gone up during the recession but are essentially flat since the official end of the recession. The red line is private consumption, and the blue line is overall GDP (private+public+investment). As you can see, GDP growth is being driven by an expanding private sector, even as the public sector stays level (shrinks relative to population growth).

I can see why this economic situation might upset liberals and those who are worried that the distribution of recent growth has benefited only those already at the top of the economic ladder. But why are conservatives upset by an economy whose defining characteristic is a growing private sector and a shrinking public sector?

Update: Wonkblog has a much cooler chart than what I could make using FRED data tools from the Federal Reserve:


Update 2: The NY Times reports (May 8th) that the unemployment rate would be a point lower, 6.5 percent, if the public sector were not shrinking so rapidly.


One thought on “Private Sector Growth, Public Sector Decline Under Obama

  1. Pingback: The U.S. Deficit is Going Down Rapidly | Faith and Public Policy

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