It sounds like a bold promise: Create 12 million new jobs over the next four years. But if Mitt Romney becomes president, he might be able to keep his pledge even if he does nothing special to aid the economy.
The promise to create 12 million new jobs is ambitious, of course, compared to the performance of the economy over the last four years. When President Barack Obama took office in Jan. 2009, the economy was nearing the low point of the Great Recession and companies were laying off workers by the thousands. Total employment fell for two years straight, from a peak of 138 million workers in Jan. 2008 to a low of 129 million workers in Feb. 2010.
If you start counting from the day Obama took office, the economy has added only 194,000 jobs during Obama's term. Obviously, that's terrible. If you start from the month the labor market hit bottom, it has created 4.5 million new jobs. That's better, but it's still weak compared to recoveries from past recessions.
The economy, however, is gaining momentum, and the pace of job creation is likely to accelerate no matter who wins the White House. The upcoming "fiscal cliff," the big set of tax and spending decisions Washington needs to make by the end of the year, is currently depressing the economy and crimping hiring. But if Congress and the White House can resolve those issues, the prospects for economic growth will brighten. A housing recovery is underway, consumers have shown a willingness to spend, and many companies are poised to hire, if only Washington would get its act together and a few other economic clouds would clear.
Moody's Analytics predicts the economy will grow by 2.1 percent next year. Under that modest projection, the labor market would add about 1.3 million jobs. But Moody's and many other forecasters expect growth to accelerate toward the end of 2013, which means employment gains would ramp up in 2014 and beyond.
To create 12 million jobs over four years, employers would need to create 250,000 jobs per month. Employers right now are creating about 170,000 per month. So under Obama, the pace of job creation is already two-thirds of the way toward Romney's target. Hitting 250,000 per month wouldn't necessarily be easy, but the economy has grown that quickly in the past, such as in the mid-1980s and the late-1990s.
Since the overall economy is larger now, creating 250,000 jobs a month ought to be a bit easier than before. The next president might also benefit from the sluggish, delayed nature of the current recovery. Some economists argue that recessions triggered by excessive debt—as the latest one was—are followed by much slower recoveries than more basic downturns in the business cycle. If that's what is going on now, the debt overhang might ease over the next year or two, another reason hiring could boom.
Obama's promises on jobs have been less grandiose and more targeted than his opponent. Obama pledges, for example, that under his policies, the economy will create 1 million manufacturing jobs over the next four years. That target may also be achievable without any specific boost from the White House.
The manufacturing sector has been shrinking since 1998, with a modest recovery in jobs that began in 2010. If it added 1 million new jobs, it would still only be back at the levels of late 2008, when the recession had already been underway for a year. Meanwhile, the Boston Consulting Group predicts that a "reshoring" trend will bring 2 to 3 million manufacturing jobs back to the United States by 2020, as it becomes more expensive to produce overseas and more cost-effective to build things in America. That could happen regardless of what Washington does.
Obama has also promised another 600,000 new jobs in the energy sector, with some of them presumably coming from green energy, an Obama favorite. That's another easy promise. Energy has been booming, on account of shale gas discoveries and other developments, with the U.S. energy sector being one of the brightest in the whole U.S. economy. Again, that has happened with little help from Uncle Sam. If Obama were reelected, he could even fudge the start point when it comes time to prove whether he lived up to his promises, and date the creation of manufacturing and energy jobs to 2010, when the labor market began its tepid recovery. There are far worse distortions in politics.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.