To lay my cards on the table right away, I’m not a Jeb Bush fan. I don’t like the former Florida Governor’s stances on trade and immigration policy. I don’t find him at all impressive on any major domestic economic issues or on foreign policy. And I would be troubled by the (further) triumph of nepotism his election as president would signal. (And yes, a Hillary Clinton victory would create much the same problem.)
At the same time, except for the dynasticism angle, I have many of those above problems with many of this year’s other Republican presidential hopefuls. So the following isn’t meant to sway your political preferences – just to remind you how looking under the hood is every bit as important in evaluating office-seekers as in analyzing economic data. And more specifically, why your antenna should have been set off today by Bush’s claims about his economic record in the Tallahassee statehouse.
According to Bush, during his 1999-2007 tenure as governor, “We made Florida number one in job creation and number one in small business creation. 1.3 million new jobs, 4.4 percent growth, higher family income, eight balanced budgets, and tax cuts eight years in a row that saved our people and businesses 19 billion dollars.”
But the dates of his term represent a broad hint that these economic achievements amounted to a pyrrhic victory for the state. For Bush’s governorship occurred during the interlocking housing and credit bubble that marked the whole U.S. economy during the previous decade. And anyone who’s been following housing in recent years knows that few mortgage markets were more bloated than Florida’s, and that few states have suffered more from the bubble’s bursting.
The official U.S. government data bear out this claim. Between 1999 and 2007, Florida’s economy strongly outgrew the nation’s as a whole, expanding by 35.63 percent after inflation versus 21.86 percent for the United States overall. But the housing bubble was a major reason. The real estate sector fueled 22.33 percent of the state’s real growth during that period, and construction contributed another 6.51 percent. Nation-wide, real estate generated 14.44 percent of real growth from 1999 to 2007, and construction actually shrank, as building activity began losing steam before the financial crisis struck full blown.
Largely as a result, during the two years after Bush left office, Florida’s economy contracted by just over 10 percent after inflation – a much deeper downturn than the 3.22 percent nation-wide slump. So Florida during the Jeb Bush years paid even less attention to the quality of growth than did America as a whole during the comparable George W. Bush years, and paid the price.
Jeb Bush is technically correct in touting Florida job creation during his governorship. From 1997 to 2008, total non-farm employment increased by 1.35 million – a 20.28 percent gain that was nearly double the 10.76 percent rise in jobs nationally. But the housing bubble, again, was a major contributor. During the 1999-2007 Bush years, construction and real estate produced 12.90 percent of those Florida job gains, versus 12.61 percent nationally. (All these and the following employment data are not seasonally adjusted.)
Even more revealingly, this job-creation mix resulted in Florida faring much worse than the rest of the nation during the recession in employment terms as well. From the recession’s December, 2007 onset (just when Jeb Bush’s second term was ending), through the nation’s employment nadir in absolute terms (January, 2010), the state lost 11.67 percent of its total non-farm jobs. The overall economy lost 8.26 percent of its jobs. This Florida out-performance was led by a stunning loss of more than 40 percent of its construction jobs (versus 28.81 percent nation-wide) and 16.52 percent of its real estate jobs (versus 10.92 percent nation-wide).
Jeb Bush can by no means be blamed for the housing bubble. But by the same token, that bubble deserves considerable credit for the Sunshine State’s apparent economic success during his governorship. Sadly for Floridians, their bubble left them even less well prepared for its bursting than most of the rest of their fellow Americans. Would Jeb Bush perform any better as president? No one can know for sure. What is certain is that his experience in state office can’t possibly provide any clues.