Obama on the private sector being 'fine:' Was he right? Wrong?

President Obama at his press conference on Friday said that “the private sector is doing fine” when discussing US economic prospects. Republicans quickly slammed him for underplaying the nation’s job woes.

“Did he see the job numbers that came out last week?” said House Majority Leader Eric Cantor of Virginia. “The private sector is not doing fine.”

Later in the day, Mr. Obama qualified his statement, saying "it is absolutely clear the economy is not doing fine." But as to his narrower point about the private sector, who is right? This happens to be a data-rich subject. Is the private sector OK or is it not?

Two points: 1) it depends what the meaning of the word “fine” is, and 2) it depends on how you judge the remark in its full context, which included Obama asserting that the real problem is a downturn in public sector, not private sector, employment.

As to the first point, Obama found few defenders on Friday who agreed that the private sector was fine, if by "fine" one means as healthy and vibrant as it ought to be. The numbers here are obvious. A bleak employment report last week showed that the US added 69,000 jobs in May, which was not enough to keep the unemployment rate from rising to 8.2 percent.

“Yes, the private sector is creating jobs – but not nearly enough to get back to normal unemployment,” wrote political scientist Jonathan Bernstein Friday on his A Plain Blog About Politics.

But if by “fine” you mean moving in the right direction, that’s a different story. The private sector is in positive jobs territory, having created an average of 160,000 jobs per month in 2012. It’s in positive territory for Obama’s time in office, as well. The US has created on net 780,000 private sector jobs since February of 2009, points out Ezra Klein on the Washington Post’s Wonkblog.

“The private sector’s job creation machine is basically working, even if it would be nice to see it working faster,” Klein wrote on Friday.

The overall job numbers remain weak because public sector employment – federal, state, and local jobs – has actually been shrinking. Obama’s stimulus package contained $54 billion in aid to states to help them keep teachers, police, firefighters, and other less popular government bureaucrats in their posts. That money has now been spent and lay-offs due to government belt-tightening have accelerated.

“In the Bush era, the public sector had added nearly 1 million jobs. In the Obama era, it’s down 600,000 jobs and counting,” wrote Slate political blogger David Weigel Friday.

This brings us to point No. 2, context. The fuller text of Obama’s quote was this: “The truth of the matter is that, as I said, we’ve created 4.3 million jobs over the last ... 27 months, over 800,000 just this year alone. The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government, oftentimes cuts initiated by ... governors or mayors who are not getting the kind of help that they have in the past from the federal government.”

Replace “doing fine” with “growing,” and Obama’s quote becomes less controversial. But “fine” is in there, and Republicans pounced on the misstep, as Democrats have on some Romney statements that look worse when shorn of surrounding words. (Remember “I like firing people”?)

On the blog of the conservative American Enterprise Institute, editor James Pethokoukis wrote that job growth remains much lower than the 1983-84 Ronald Reagan economic recovery from recession. Private sector GDP rose just 2.6 percent in the first quarter of this year, and only 1.2 percent last year.

The stock market is down 7 percent since early April and real take-home pay is down over the past year.

“No, Mr. President, the private sector isn’t doing fine at all,” wrote Pethokoukis in response to Obama’s press conference remark.