As President Obama prepares to deliver yet another speech about stimulating the economy — this one to a joint-session of Congress (with or without the NFL game on the monitors) — it's worth reviewing the results of his efforts to date.
It has now been a little over two years — and eight full economic quarters — since the end of the recession Obama inherited. It's time to ask: How does his record of economic growth in the wake of a recession stack up against the records of other presidents?
The National Bureau of Economic Research (NBER) defines a recession as "a period between a peak and a trough" during which "a significant decline in economic activity spreads across the economy and can last from a few months to more than a year."
By consensus, the most recent recession ended in June 2009, less than six months after Obama took office.
According to the NBER, in the 60 years prior to Obama's tenure, we had 10 recessions. In the two years following those respective recessions, average real (inflation-adjusted) quarterly GDP growth was 5%, according to federal government figures. In the two years of Obama's "recovery," average real quarterly GDP growth has been just 2.4%, less than half of the historical norm coming out of a recession.
What's the difference (in more practical terms) between 2.4% and 5% growth over two years? According to Obama's own budget, this year's GDP will be about $15 trillion. (It's running neck and neck with the national debt.) A 2.6% shortfall, therefore, equals about $780 billion over two years.
If you divide that evenly among the U.S. population of 312 million people, that works out to a shortfall of $2,500 per person — or $10,000 for the average family of four. Call it the Obama penalty.
Some might argue that the anemic post-recession growth rate under Obama has resulted from his having inherited a worse recession than most. There's little doubt that he inherited a particularly long (18-month) and significant recession. But the historical record suggests that, pre-Obama, the general rule was: the worse the recession (or depression), the better the recovery.
In other words, one would have expected such a severe downturn to be followed by a particularly strong stretch of economic growth. That, of course, hasn't happened.
But it has historically. If we look only at the six postwar recessions that lasted at least half as long (that is, at least nine months) as the recession Obama inherited, we find the following:
Average real quarterly GDP growth in the two years coming out of those recessions was 6.2%. The 2.4% figure under Obama has been a mere 39% of that — which, come to think of it, roughly matches Obama's current approval rating.
And strikingly, among those six prior long recessions in the postwar era, even the lowest rate of GDP growth in the two years to follow was 4.7%. That's almost double the tally under Obama.
The worst economy that any American president has inherited, of course, was when Franklin D. Roosevelt took office during the Great Depression. According to the NBER, the Depression actually involved two separate downturns (or "contractions").
The first was from August 1929 to March 1933. The federal government doesn't publish quarterly GDP growth figures from that far back, but average annual real GDP growth for 1934 and 1935 was 9.9% — more than quadruple Obama's 2.4.
After FDR's landslide (and unsurprising) reelection in 1936, the economy plunged into the second deep trough of the Great Depression, from May 1937 to June 1938. Coming out of that, average annual real GDP growth for 1939 and 1940 was 8.5% (leading to FDR's subsequent reelection).
In truth, one might say that Barack Obama was elected at a very enviable time. He came into office when the economy was down but poised to start recovering within the next several months. All he had to do was be within the ballpark of the historical rate of 5% real growth coming out of recessions (or 6.2% coming out of longer recessions), not do anything horribly unpopular — like spearheading the passage of ObamaCare — and he could have ridden to an easy victory in 2012.
Now he'll have to get the American people to validate both ObamaCare and a growth rate that's less than half of what his predecessors generally achieved under similar circumstances.
• Anderson is a senior fellow at the Pacific Research Institute.
http://www.investors.com/NewsAndAnalysis/Article/583866/201109061718/Obamas-Recovery-A-Flop-Of-Historical-Proportions.aspx?src=IBDDAE
No comments:
Post a Comment