Doing the math: Obama recovery still the worst in decades
posted at 2:01 pm on October 25, 2012 by Ed Morrissey
Lately, Barack Obama has taken to claiming that he’s leading a slow but steady economic recovery, hampered by the nature of the 2007-8 Great Recession and other external factors. Two different analyses today rebut that assertion on the eve of the next advance report on quarterly GDP. First, Investors Business Daily’s John Merline refutes both the economic recovery and the supposedly mitigating context in its analysis, buttressed by a charted comparison to previous American recoveries:
In the 12 quarters since the Obama recovery started, real GDP has climbed 6.7%. That’s below even the GDP growth rate in the 12 quarters after the 1980 recession ended — despite the fact that there was the intervening deep and prolonged 1981-82 recession.
The picture isn’t any better when looking at job growth.
Obama often boasts that the economy has added 5.2 million private-sector jobs in the 31 months since employment bottomed out in February 2010. But that rate of job growth lags every previous recovery as well if, as Obama does, you start counting at the point where jobs bottomed out.
Bush oversaw 5.3 million new private-sector jobs in the 31 months after employment hit bottom in mid-2003. Under Reagan, private-sector jobs climbed 8.2 million during a comparable time period.
What’s more, Obama’s recovery has reclaimed only about half the jobs lost during the recession. That’s a far cry from prior recoveries, which saw the number of jobs exceed the previous peak by this point.
What about the “inherited mess” argument? Merline points to two studies that say the financial crisis had little to do with the nature of the recovery:
In fact, an October 2011 paper by the Atlanta Fed concluded that “U.S. history provides no support for linking low employment and high unemployment in the current recovery with the financial crisis of 2007—2008.”
And a November 2011 paper by economists at Rutgers University and the Cleveland Fed concluded that while recessions tied to financial crises tend to be deeper than average, the recoveries also tend to be stronger than average.
Study co-author Michael Bardo noted that, based on these findings, “the slow recovery that we are experiencing from the recession that ended in July 2009 is an exception to the historical pattern.”
Merline provides this graphic to underscore his point:
Reason Foundation’s Samuel Staley writes at Real Clear Markets that not only has Obamanomics utterly failed, it’s gone a long way to discrediting the very economic assumptions on which it was based:
Back in January 2009, a now infamous study coauthored by Christina Romer, the future chair of the President Obama’s Council of Economic Advisors, and Jared Bernstein, the future chief economist for the Vice President, predicted that an $800 billion economic stimulus targeted toward boosting consumer demand would stave off a severe recession and hold unemployment below 8 percent by the end of 2009.
What was so compelling about their study was the illusion of precision. The Obama administration used their statistical analysis to aggressively promote specific policy proposals, including the package of tax cuts and discretionary federal spending embodied in the so-called stimulus package, the American Recovery and Reinvestment Act of 2009.
But little of what they predicted has panned out.
Unemployment remained over 8 percent for three-and-a-half years, finally dropping to 7.8 percent in September. But that’s only because we don’t include “discouraged workers,” those who have given up looking for work, or those unwillingly working in jobs below their skill and education levels. Moreover, job creation remains lackluster, barely adding enough to meet demand in a still anemic economy three years after the recession officially ended. …
In short, in what is perhaps the most important exercise in economic policy modeling since the Great Depression, two of the nation’s foremost economists failed. And the failure was an epic one. They predicted that unemployment would peak at 8 percent after the stimulus. In fact it peaked at 9.9 percent. So it’s unclear whether trillions of dollars of stimulus spending bought the country any reduction in unemployment whatsoever. It’s also hard to escape the conclusion that it would have been better to do nothing and let the economy run its course.
Indeed, this failure is particularly notable because Romer and Bernstein’s effort was well within accepted mainstream practice of the profession, not an exception.
Glenn Reynolds offers a couple of graphs to illustrate the point here, too. First up is the amended Romer chart, which depicts exactly what Stanley describes:
Here’s a look at the employment-to-population ratio, using Bureau of Labor Statistics data:
We can also see the same in the related civilian population participation rate, charted here by the BLS from its own data, through August:
Clearly, we are not moving in the direction of growth — not in GDP, not in jobs. If anything, both are declining. Why can’t Obama understand that? As the Washington Free Beacon recounts today from Obama’s appearance on The Tonight Show with Jay Leno, Obama’s not terribly good with math:
LENO: Here’s Samantha from Colorado: “When you help your daughters with their homework, is there a a subject you struggle with?”
PRESIDENT OBAMA: Well, the math stuff I was fine with up until about seventh grade.
PRESIDENT OBAMA: But Malia is now a freshman in high school and — I’m pretty lost.
PRESIDENT OBAMA: Fortunately, they’re great students on their own. and, you know, if something doesn’t work, I’ll call over to the Department of Energy and see if they have a physicist to come over.
You know what might help? Finding someone who’s actually got a track record of being good at math, at turning around organizational declines, and who has a long track record of astute economic analysis and action. Fortunately, we have that option in 12 days.