President Obama's economic legacy has just been cemented

There is a lot you can say about the economy under President Barack Obama.

But any sober discussion about what was or was not accomplished during the Obama years needs to begin with the labor market. Because if there’s one economic accomplishment you can’t take away from Obama, who took office during the darkest days of the financial crisis, it is that a ton of jobs were added to the US economy during his time in office.

The December 2016 jobs report, covering Obama’s final full month in office, showed that 156,000 jobs were added to the economy. The unemployment rate rose 0.1% to 4.7%, bouncing slightly off November’s post-crisis low of 4.6%. This is down sharply from 10.0%, where the unemployment rate peaked in October 2009.

Perhaps the most important part of this report for financial markets and Fed-watchers was the 0.4% month-on-month improvement in wages, which pushed year-over-year gains up to a new post-crisis high of 2.9%. This was the strongest pace of wage growth since June 2009.

President Barack Obama
President Barack Obama

With Friday’s report, 2016 now marks the third-straight year the US economy added more than 2 million jobs. Since the beginning of 2010, 15.8 million private sector jobs have been added to the economy.

In a post published Friday, Jason Furman, Chairman of the Council of Economic Advisers, ran down a number of the labor market related milestones reached during the Obama years.

A few stand out.

75 consecutive months of job gains

December’s report marks the 75th-straight month of nonfarm payroll gains, extending the record streak that now towers over the previous long of 48 months seen during the late-80s.

Source: White House
Source: White House

Furman also noted that this streak comes as the public sector (read: government) has been a net drag on employment growth. “As of December 2016, total nonfarm employment exceeded its pre-recession peak by 6.9 million jobs,” Furman wrote.

“All of the net job creation in the current recovery has been in the private sector, as private-sector payroll employment exceeded its pre-recession peak by 7.0 million jobs as of December.”

Wage growth acceleration

After a long stretch of disappointing data, wages have also started to come around as the labor market has neared (or reached, depending on who you ask) full employment during the later stages of the post-crisis expansion. Full employment is roughly defined by economists as the unemployment rate at which wages begin to accelerate.

Since the end of 2012, nonsupervisory workers have seen wages rise 1.3% per year, lower than total wage gains, but faster than the average seen form 1980-2007.

If you look at the chart below, you’ll see that the last time we really saw nonsupervisory wages accelerating like this was the late-90s, the best economic stretch of the last generation.