Near the End of The Obama Presidency, Investors Business Daily published an editorial titled, “Sorry, This Is Still The Worst Economic Recovery Ever.”
In light of where we stand now and what President Trump and his administration accomplished prior to the COVID-19 shutdown of America, it is important to see what IBD had to say about the lack of economic recovery under the President Barack Obama and Vice-President Joe Biden administration.
Growth: The president keeps congratulating himself on how the economy’s doing, and Hillary Clinton just gave her former boss an ‘A’ for his handling of the nation’s finances. Who said inflation was under control?
The latest revised numbers for GDP growth through the third quarter of 2015 tell us that we are still stuck in a 2% growth rut and real middle-class wages are still flat-lining.
Meanwhile, another new report from Sentier Research based on Census data finds that median household income of $56,700 at the end of 2015 stood exactly where it was, adjusted for inflation, at the end of 2007.
That’s eight years of virtually zero income gain. And Obama and his Washington pals wonder why voters are in such a cranky mood.
Last week, the Joint Economic Committee of Congress issued a new report on the Obama recovery that’s loaded with even more bleak news.
On almost every measure examined, the 2009-15 recovery since the recession ended in June of 2009 has been the meekest in more than 50 years.
Start with the broadest measure: growth in output. The chart with this editorial compares the Obama growth pace with that of the average recovery coming out of the last eight recessions, and with the Reagan recovery, and over the same number of months (77).
Democrats used to disparage the Reagan expansion as nothing special. Yet the growth rate over the first 25 quarters under Reagan was 34%, vs. 14.3% under Obama.
How much does this matter? If we had grown at an average pace, GDP in 2015 would have been about $1.8 trillion higher. Under the Reagan recovery, growth would have been $2.7 trillion higher.
It is certainly true that every recession is different in cause and consequences, so the JEC dug deeper into the numbers. It examined GDP growth on a per capita basis.
The Reagan recovery was abnormally strong in part because it happened as millions of baby boomers were swept into the workforce, adding to growth.
But even on a per capita basis, real GDP has grown only 9% vs. 18.8% for the average recovery. That is the lowest of any post-1960 recovery. The growth decline in this key gauge of living standards is alarming.
Next, the JEC measured job market trends. Again we see a failing record. Yes, official unemployment of just over 5% today is very low.
But that’s because 94 million people in America over the age of 16 aren’t in the labor force. Labor force participation rates have fallen sharply for working age Americans. If job growth had been the same as in the average recovery, we would have 5.9 million more Americans working.
Amazingly, if we had had a Reagan-paced job recovery, we would today have at least 12 million more Americans working. That’s more people than in the labor force of Michigan and Indiana combined.
When business investment is weak, fewer people work. Wages and family incomes remain stagnant.
That’s the sorry story of the Obama era.
And it was no accident, by the way. It’s the result of policy moves by the Democrats, who controlled Congress completely from 2006 to 2010, by President Obama, who has been in office since 2009 and by the Federal Reserve. All operated on the mistaken notion that more government, not less, would fix things.
The trillion-dollar stimulus of 2009, Dodd-Frank financial reforms, an $8 trillion surge in federal debt, ObamaCare, higher taxes on those who work, and an ongoing regulatory siege that has pushed the number of federal rules to an all-time high — all contributed to the epic slowdown in economic growth that plagues our nation.
As for the Fed’s quantitative easing — under which the central bank printed more than $3.5 trillion in new money as “stimulus” — and 0% interest rates, they were also a bust for growth.
If Obama’s recovery had been just average — in other words, a C grade — JEC calculates that “after-tax per-person income would be $3,339 (2009 dollars) per year higher.” That’s about $278 a month per person in missing income.
This lack of growth is especially bad for those at lower incomes. Not only can they not climb the ladder of opportunity in a stagnant, slow-growth economy, but a substantial number actually fall back into poverty.
The poverty rate as of the end of 2014 — the last full year for which data are available — was 14.8%. That’s higher than in 1966, the year President Lyndon Johnson’s “War on Poverty” went into effect.
President Obama’s economic policies share a major part of the blame for that — and for Americans’ growing sense that something’s gone very wrong in our country.
The JEC’s dreary conclusion tells the whole sad story of the era of Obamanomics in one brief line: “On economic growth, the Obama recovery ranks dead last.”
Dead last. Americans can feel the effects of this squeeze when they pay their bills each month at the kitchen table, and when their paycheck doesn’t stretch so far when they shop at the local store.
For the record, a last-place position isn’t an A grade, it’s closer to an F.
If this is the record that presidential candidate Hillary Clinton wants to run on, by all means, let her.