For the past two years, the Obama administration has tried to sell the American public on the notion that its economic policies created a substantial recovery. Friday’s GDP numbers, especially the revisions that impacted results for the past several years, has put an end to that illusion. Derek Thompson at The Atlantic lowers the boom on the supposed Obama recovery (via Instapundit):
Yesterday, analysts thought the economy was expanding by 2.5% a year. This morning, they learned GDP grew by only 1.6% in the last four quarters. This is a remarkable discovery. It’s the difference between thinking we’re expanding at a decent, if disappointing, pace, and knowing we’re growing around half our historical norm.
Analysts also thought, as recently as twelve hours ago, that the economy declined 6.8% and 4.9% in the quarters bisected by Obama’s inauguration. It turns out the actual declines were much steeper: 8.9% and 6.7%.
To adopt the president’s favorite metaphor of the ditch and the driver: The ditch was a 33% deeper than we thought. And we’re driving 33% slower than we hoped.
Thompson includes a couple of eye-opening charts, although nothing that we haven’t seen before. Check out his charts comparing the recession and post-recession periods of various downturns, but this one from the Minneapolis Federal Reserve on employment really tells the story better:
Now we know why employment has skittered along the bottom end of the curve for so long. Our economy hasn’t been expanding much at all during the two years of recovery, noted on the bottom line by the black square. No wonder we’re barely above the employment level of the recession’s end 24 months later.
How about comparing actual output recovery cycles after recessions? Here was the chart on output from the Minneapolis Fed before the revisions:
That trajectory will be lower, thanks to the restated numbers from the BEA. It’s the worst “recovery” we’ve had in the post-WWII period. Even tracked from the recovery point, this post-recession period (with revised GDP numbers) will end up worse than the double-dip recession of 1980-81 and the 9/11 recession in 2001 that destroyed a lot more than paper assets.
We have been saying for two years that the Obama “recovery” has been smoke and mirrors, and the revisions in the GDP reporting make that pretty clear now. The other clear takeaway from this is that the Keynesian stimulus bill utterly failed to produce anything more than a temporary, artificial spike in economic indicators, and not a particularly impressive spike at that.
Salena Zito says that a lack of focus on jobs and real economic will cost Obama dearly in 2012:
When historians look back on this moment in American politics, they may wonder why the White House failed to focus on the consuming issue of the time: the economy — and, in particular, jobs. …
In June, the nation’s unemployment rate rose for a third straight month, as employers added only 18,000 workers and corporate earnings languished.
Anyone buying basic groceries can feel the pinch of consumer prices rising to offset higher commodity costs, so buying little beyond what you absolutely need has become the norm.
President Barack Obama’s support has eroded among the very independent voters who helped him sweep into office. That drop-off is based on his inability to lead on numerous issues, but most importantly on the economy.
They’re going to start asking why the jobs haven’t come back, too — and conclude that Obamanomics has been a very expense fiscal catastrophe.