Comparing economic legacies.
The Hill reported last week that President Obama wants to “pivot to his economic legacy.”
Specifically, “the White House hopes to ride the wave of an economic recovery to improve Obama’s approval numbers over the final two years of his presidency, setting up a possible Democratic successor at the White House.” If The Hill’s Amie Parnes and Peter Schroeder had submitted their writeup to The Onion, they would have gladly run it.
Unfortunately for the President, one good quarter — assuming it even survives subsequent revisions, and especially following a quarter of contraction which was originally reported as positive before the heavy-duty erasers came out — does not a positive legacy make. Nor will another two years of the 2.4 percent economic growth seen during the past four quarters, again before revisions to the most current quarter.
By the three key measures of economic, job and income growth, Barack Obama’s economy, also known to yours truly as the POR (Pelosi-Obama-Reid) economy to identify the three parties most responsible for the both the depth of the Great Recession and the historically awful “recovery” which has followed it, has been historically horrid.
Obama’s economic policy, with the help of a pliant Federal Reserve, has been built on the notion that massive deficit spending and easy money would bring the economy roaring back and “stimulate” job growth. The former strategy was tried during the 1930s. It only succeeded in lengthening the Great Depression, as the nation’s unemployment rate never fell below 12 percent. The fact that Team Obama insisted on making the same mistakes, while at the same time unleashing the federal government’s regulatory apparatus to harass the economy’s productive participants, is enough to make reasonable people question whether this president and his administration have ever truly wanted to see a genuine recovery occur.
On the other hand, five years of strong, solid and uninterrupted economic performance following a serious recession is how you create a positive economic legacy. Ronald Reagan’s post-recession economy — an economy which faced arguably greater challenges when he took office, particularly double-digit inflation and a prime interest rate of 20 percent — did just that.
Reagan’s economic policy, conducted in the face of necessarily painful anti-inflationary Federal Reserve monetary policy, was premised on supply-side tax cuts and regulatory restraint. A third element, getting federal spending under control, didn’t occur because (surprise) Democrats reneged on promises to cut spending made during budget negotiations. Today, Obama’s crew anticipates annual budget deficits which will never fall below $450 billion and will balloon back to $1 trillion within a decade.
First, let’s compare post-recession economic growth, as seen in increases in real (inflation-adjusted) Gross Domestic Product:
Five years after the early-1980s recession ended, the U.S. economy was almost 26 percent larger. The Obama economy, in the worst five-year recovery since World War II by miles, hasn’t achieved even half of that.
The difference is, well, graphic:
Now, let’s look at job growth.
As seen below, even before considering the fact that the U.S. had 32 percent fewer people working at the end of the 1980s recession than it did in mid-2009, the Reagan economy added almost 6 million more jobs in its first five post-recession years than the Obama economy:
Team Obama has taken to bragging about private-sector job growth. But even there, before adjusting for workforce size, the Reagan economy beat out Obama’s by almost 3.9 million jobs.
In an apples-to-apples comparison showing employment growth in percentage terms, it’s an utterly embarrassing rout:
As seen in the graph, one important element in the Obama economy’s lackluster employment growth was its failure to stop job losses until eight months after the recession ended. That’s exactly what the President’s and the Democrat-dominated Congress’s stimulus plan said it would prevent. They also said it would bring the unemployment rate down to 5.3 percent by the end of the his first term. It utterly failed on both counts.
Beyond that, the Obama economy, five years into its “recovery,” has unprecedentedly failed to bring full-time employment to its pre-recession peak, standing at 3.4 million jobs short as of July. Millions who want to work full-time are stuck in part-time positions. Millions of others are discouraged and on the sidelines. (And we’re supposed to believe that Obamacare has absolutely nothing to do with any of this.) Reagan’s economy took only 12 months after that era’s recession ended to restore full-time employment to its prerecession peak. By the end of 1987, over 10 million more Americans were working full-time.
Finally, let’s look at household income growth — I’m sorry, I meant income growth during the Reagan era and income declines during Obama’s reign:
Median household income increased by over 9 percent during the five years after the early 1980s recession ended. In the first three years after the most recent recession’s official end, it has declined by over 4 percent. Monthly median household income estimates compiled by Sentier Research indicate that there has been a very slight rise since then.
Even with the expected heavy dose of help from the establishment press, a Democratic Party presidential nominee try to run on Obama’s supposedly tremendous economic “legacy” of weak economic growth, chronic underemployment, and middle class-damaging income declines will likely be making a grave mistake. That’s because, as the Associated Press had to admit last week, despite the press’ current best efforts, the American people “don’t feel it.” Two years of marginal improvement, which is the best anyone can realistically hope for, won’t meaningfully change that.