Is "The Romney Plan" Too Optimistic?

In this morning's Wall Street Journal, Romney economic advisor Glenn Hubbard outlined The Romney Plan for economic recovery.  Mr. Hubbard contends that Governor Romney's plan will "speed up the current recovery, enabling the private sector to create 200,000 to 300,000 jobs per month, or about 12 million new jobs in a Romney first term, and millions more after that due to the plan's long-run growth effects."

While statements like this sound good on paper, just how likely is the plan to work in practice?  Without getting into the specifics of The Romney Plan, let's just look at prior history.  The chart below shows the historical change in non-farm payrolls over a rolling 48-month (4 years) period going back to 1943.  Over the last 70 years, there have only been five other periods where the US economy actually added 12 million or more jobs over a four year period.  So at first glance, it would appear that Mr. Hubbard's claims are overly optimistic.

What the above chart does not take into account, however, is that the size of the US labor force has not been constant over the last seventy years.  For example, seventy years ago there were only 60 million workers in the labor force.  Today that number is more than 155 million.  Adjusting the changes in non-farm payrolls to make an apples to apples comparison shows that periods where the US economy added 12 million jobs over a 48 month period are a little more commen.  Even still, if the economy were to add 12 million jobs over a four-year period, it would be the strongest growth (on an adjusted basis) in more than 12 years.

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