November 2, 2012

The Obama Economy: Still Not Recovered

Filed under: Economy,Taxes & Government — Tom @ 6:59 am

Not even back to where we were when the recession began.

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This column was posted at PJ Media and teased here at BizzyBlog on Wednesday.

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On Friday, the government reported that the nation’s gross domestic product (GDP) grew at an annual rate of only 2.0 percent.

The establishment press thinks we’re supposed to be happy that it wasn’t the 1.8 percent analysts expected. Please. Over one-third of the reported growth came from increasesd federal defense expenditures, which may only have occurred because of the “need” to spend as much as possible before the September end of Uncle Sam’s fiscal year and the onset of sequestration. Additionally, nonresidential investment in the private sector, which is most definitely not “doing fine” as President Obama claimed in June, actually dropped.

Annual growth remains on a downward trajectory. So far in 2012, the economy has grown at an annual rate of 1.7 percent. Last year, it grew by 1.8 percent, and in 2010 by  2.4 percent.

Here’s a bone for the clowns in the Obama campaign like Stephanie Cutter who go on TV and blatantly lie about how the current economy is generating Reagan-like numbers. The economy under Ronald Reagan also saw declining annual growth, except for one “little” thing: GDP expansion went from an astonishing 7.2 percent in 1984 to a perfectly fine 4.1 percent in 1985 to a still pretty darned good 3.5 percent in 1986.

Several commentators, including the American Enterprise Institute’s James Pethokoukis, while accurately noting that the Reagan-era recovery saw growth which almost tripled what we’ve seen under Obama during the 13 quarters since the recession officially ended, understate this economy’s real-world underperformance and its negative impact on everyday people.

No less than insufferable Obama cheerleader Warren Buffett told CNBC in September 2010 that he didn’t consider the recession to be over more than a year after its official end. He then laid down his own benchmark for defining its conclusion:

I think we’re in a recession until real per capita GDP gets back up to where it was before (the recession began) … on any common sense definition, the average American is below where he was before, or his family, in terms of real income, GDP. We’re still in a recession. And, and we’re not gonna be out of it for awhile, but we will get out of it.

Guess what, pal? We’re not “out of it” yet:

RealPerCapitaGDPthru3Q12Oct28

Perhaps the Obamalover of Omaha thought that the economy would achieve this benchmark by now, and as such that his statement two years ago carried no political risk. Well sir, we’re still 1.5 percent below the the pre-recession per capita GDP peak. At the rate of growth seen in the past three quarters, we won’t get above it until the second quarter of 2014, five years after the recession officially ended. No post-World War II economy has performed this poorly after a recession.

By contrast, per capita GDP under Reagan took a mere three quarters to get back to its pre-downturn peak, and was almost 12 percent higher 13 quarters after that recession’s end:

RealPerCapitaGDPunderReagan

The chart shows why Reagan was able to ask Americans in 1984 if they were better off than they were at the beginning of his term. He already knew the answer; per capita GDP and real income were already far ahead of their pre-recession peaks by that summer. Under Obama, both statistics still trail.

Those who argue that the most recent recession was much steeper than the Reagan-era downturn totally miss the point in two ways. Most obviously, though the per capita GDP drop of 6 percent during the most recent recession is greater than the 4 percent drop during 1981-1982, the chart above shows that the explosive Reagan recovery would only have required a couple more quarters to make up that difference. A less obvious but more important point is that the Reagan downturn wasn’t as steep because the Kemp-Roth supply-side tax cuts which first took meaningful effect in 1982 cushioned the recession’s impact in arguably tougher circumstances, which included 13 percent inflation and interest rates topping 20 percent.

Despite Obama’s historic underperformance, Buffett continues to support Obama. That shouldn’t be a surprise, given how much one of his companies has benefitted from the Keystone Pipeline’s continued delay. Covering his tracks, Buffett announced his support for the pipeline in May. By that time, his opinion didn’t matter, but I guess his public perception did.

Thanks to four years of out-of-control spending and industry-stifling top-down control, the worst economic stewardship by a presidential administration since Franklin Delano Roosevelt lengthened the Great Depression by implementing eight years of out-of-control spending and industry-stifling top-down control continues. The misery won’t stop if Barack Obama wins reelection. The Wall Street Journal reviewed the President’s “Plan for Jobs and Middle-Class Security” and pronounced it Obama’s “Second First Term.”

We won’t even be that lucky if Obama wins a second term. We really don’t want to see what he and his minions would do once he and they are unencumbered by the need to face reelection.

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