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  • Is Obama Turning the Economy Around?

    President Obama took to the national stage today and again repeated his claims that administration policies are producing a robust economic recovery. However, public opinion polls and recent election results underscore a very different perception: working Americans see an economy still deeply depressed in key sectors and much slower everywhere than it should be. In short, according to the perception at least, the president’s policies have not turned the economy around as fast they expect.

    So who are you going to believe, the President or your lying eyes? Where are we today compared to the other, big recession of the post World War II period, the early 1980s? One way to answer that important question is to compare the two recessions calendar quarter by calendar quarter.  At its worst point, or seven quarters after the start of the recession in 1981, the economy was just as weak as the worst days of the recent recession.

    Today, we are 17 quarters from the beginning of the last recession that started in December 2007. At this point in the 1980s, the economy was well on its way to normal levels: output stormed back to near normal levels: GDP growth without inflation averaged 4.9 percent during the recovery period. The unemployment rate was in the low 6 percent range by the 17th quarter and would get to 5.6 percent by the end of that year, 1987.

    By contrast, our economy today, 17 quarters after the start the recent recession, remains dramatically weaker than it should be: real GDP growth over the current “recovery” has averaged only 2.5 percent and the unemployment rate stands at very high 8.2 percent, well above the normal, full-employment rate of 5.5 percent. Millions of people lack work and, more importantly, little prospect of finding employment.

    These numbers starkly indict the president’s economic recovery program. Unprecedented deficit spending has done little else than create ballooning federal debt that itself now slows the economy. Rather than lighten regulations and lower taxes as President Reagan did in the 1980s, this president has launched 3,611 new regulations. 106 of them are major regulations, those with an annual impact of $100 million or more, which discourages entrepreneurship, investment and innovation. And, in the midst of all these failing grades in economic stewardship, the president urges voters to support his plans for more regulation, higher gas prices, and higher taxes.

    Obviously, we should do just the opposite…and quickly. Even suggesting that taxes will rise and regulations will grow harms our economic prospects, and more debt further burdens our prospects for recovery. Truth is, working Americans have figured this out. The big economic question of the day is, will President Obama?

    Posted in Featured, Ongoing Priorities [slideshow_deploy]

    28 Responses to Is Obama Turning the Economy Around?

    1. Vince says:

      "Recession" is a technical term whose definition requires 2 consecutive calendar quarters of negative GDP growth . Since 4th QTR 2008 had a teeny positive GDP increase, the Obama Recession began in 1st QTR 2009 and ended with 3rd QTR 2009 (July, 2009), when the US GDP went positive again. Teeny little numbers, but positive. The USA has been out of its Recession since mid-2009 and there is no indication that another Recession is likely any time soon.

      Anything that is not negative GDP growth is a "slow down" or a "period of increased unemployment" or something.

      • Pragmatic says:

        How dare you distinguish fact from rhetoric. +1 for you vince.

      • William says:

        A raging genius…

      • Well, the first part's true about the recession having ended. We're in the recovery phase right now, however lackluster it is.

        As for the second part about a second recession, we'll have to see how the trouble in Europe plays out.

    2. Scott says:

      This may play with the Obama Kool-Aide drinking crowd. Make that a 16oz cup Mayor Bloomberg.

    3. I couldn't believe my lying ears when Obama claimed his recovery has been more robust than the one "a decade ago." That would be the post 9/11 recession and recovery, right? That one definitely needs to be fact checked.

      Oh, and @Vince … anemic growth (1.9%) in the most recent quarter, and monthly new job creation trending downward, are huge red flags for the potential of a new recession. wake up and smell the coffee.

    4. kverdeck says:

      What's interesting is that–whether by force or by choice–Obama has to date been following the Republican prescription for the economy. What has he done that isn't in the GOP playbook, or hasn't been forced on him by the obstructionist GOP Congress? If he had free rein to do so, Obama would increase government spending to make up for the lack of aggregate demand still plaguing the private-sector, and he'd raise taxes on the wealthy to make up for the budget deficits. He's been able to do neither of those things, so we're basically on the very path that the GOP wants us to be on–and of which we're promised only more if the GOP carries the election–and where is it getting us? In this blog's own words, "real GDP growth over the current “recovery” has averaged only 2.5 percent and the unemployment rate stands at very high 8.2 percent, well above the normal, full-employment rate of 5.5 percent. Millions of people lack work and, more importantly, little prospect of finding employment."

      It's also a bit disingenuous to compare this recession and recovery to that of the early 1980s, which was largely caused by the Fed's activity to reduce inflation. That recession was relatively easy to remedy by lowering interest rates, which resulted in a housing boom that stimulated the economy at large. That's not an option now as interest rates are already near the zero bound. At the same time, by this point in Reagan's presidency, he had increased government spending by 14.4% compared to 4 years previously; Obama at this point has increased spending by only 6.4% compared to 4 years ago, and most of that only due to an initial boost–since then we've seen a huge decrease in per-capita government spending, most particularly at the state and local levels. And again, the result is the pseudo-recovery you're smelling, wherein fully 93% of what GDP growth there may be is going to the top 1%.

      • "If he had free rein to do so, Obama would increase government spending to make up for the lack of aggregate demand still plaguing the private-sector, and he'd raise taxes on the wealthy to make up for the budget deficits." Except that raising taxes DECREASES government revenues, and increasing spending has NEVER helped the economy recover. Only increasing PRIVATE income retention helps, as it leads to more investments, hiring, wealth generation, and ultimately more money to pay to the government at the lower rate. new govt regulations cost the economy 38 billion dollars in the 1 yr after obama took office, and the amount of govt regulations has been growing at an alarming rate, dragging our economy down and preventing companies and individuals from having the time and money to invest and receive a return on those investments.

        • Pragmatic says:

          "Except that raising taxes DECREASES government revenues, and increasing spending has NEVER helped the economy recover."

          Except for this is false. Raising taxes can increase revenue. You're mistaking half of the Laffer Curve argument and applying it incorrectly. The argument is after a certain point taxes decrease revenue, not that tax increases always decrease revenue.

          Increases in government spending can help the economy recover – especially through borrowing. For instance, money spend by the government becomes income for the citizens through services rendered (like highway construction). They can then use this money to stimulate demand for other projects. So the story goes.

          • Stirling says:

            Thanks Prag, just let Obama make our Debt 100 Trillion (good round number) and see how quickly this Countries Debtors laugh our Dollar to the trash bin. Uncle Ben can just print up annother 50 Trillion and you'd be fine with that right ?? Everyone wil have tons of cash but it will be worthless. The Laugher Curve means nothing when those with money know the money is being devalued. They will move to Gold to preserve wealth and will not spend.

          • ultimately says:

            "Increases in government spending can help the economy recovery – especially through borrowing"?? How much more do you want China to own in the US? What happens when Putin and China decide to call the marker. You people are definitely delusional. As Reagan said many years ago, "Government is not the Solution, Government is the Problem". Raising taxes in this economy will not increase revenue. The Private Sector is waiting for the November elections to determine if they are going to invest in growth as they may be facing looming taxes if Obama wins. If that happens more jobs will move overseas. You going to blame Bush again? Wake Up and Stop spewing the rhetoric. The GOP is not the obstructionists. The Democrats in the Senate are. Mr. Reid refuses to pass a budget. Explain that. Because they can't without increasing taxes to feed their increased spending for "entitlement" programs such as Obamacare that already has doubled in cost from projected numbers. When will you people get it and stop spewing rhetoric like good "little german soldiers"?

      • Steve says:

        Obstructionist GOP Congress? It's not a GOP Congress -the Democrats control the Senate and refuse to do anything in a bi partisan way…Increase government spending? The government doesn't have a job so they have to take money from us the taxpayer. Tax the wealthy? Why discriminate against successful people. You need to cut the wreckless spending and get a budget passed – which the Senate seems unable or unwilling to do –

        • Yvonne says:

          Steve, you are so correct! The Democrats squelch any/all efforts of the GOP, and it is despicable. Pelosi and Reid are economy killers, and the Democrats have had both Houses in their grip prior to Boehner. Reid should have been ousted long ago, but we all know how he's managed to keep his seat. Pelosi's pathetic words, "The best bang for the buck is food stamps" keeps ringing in my ears. Something has to be done about the fact that there are disgusting facts regarding the far-too-many lazy and slovenly undeserving recipients of 'entitlements'. Welfare needs reform……..now!

        • kverdeck says:

          You're right that the Dems have a slight majority in the Senate, but it's not a filibuster-proof majority, so the GOP has taken every opportunity to invoke cloture votes and/or the filibuster itself to prevent the passage of.. well, just about everything that could actually help the economy. Meanwhile, they've proposed pretty much nothing of their own that has any prayer of getting passed, because they really aren't interested in helping the economy. The worse things get, the more they can blame Obama. Remember when Mitch McConnell said that the GOP's main goal was to make Obama a one-term President? He meant it. I know that sounds just peachy to many reading this blog, but is it when it comes at the cost of a long, drawn-out economic quagmire (which the GOP promises only to make worse faster when elected)?

      • John N says:

        Was 'Obamacare' a GOP plan? What about no cuts to the bloated spending (GOP's plan?)? What about the Czar appointments? What about the shunning and reject of the constitution? What are the business people afraid of? (Not the GOP's plans.) The list goes on and on. Let's get the socialist voted out this November.

        • kverdeck says:

          As a matter of fact, "Obamacare" originated right here in the hallowed halls of the Heritage Foundation, and then Mitt Romney (a Republican, maybe you've heard of him?) took it and implemented it in Massachusetts, where it seems to have worked pretty well. Let a Democrat try to take it national, though, and suddenly it's a horrible, nation-killing idea. Funny how that works.

    5. Yorkshire says:

      I guess BO clicked his Ruby Slippers again, closed his eyes and said to himself, Things Are Better, Things Are Better. Then he opened his eyes and put on his rose colored glasses to view the world.

      • Brentha says:

        LOL>> I think this is a Great Post. Obama has Never Led Our Country and all in all Blames Everyone else. Can we Really Stand 4 more years of Obama? I do not think so.

    6. Bobbie says:

      Obama's plans only come with future crisis', costs, corruption and contingencies. Collective minds of narrow thinking say "we have nothing but my plans and will go with nothing my plans for future sacrifice and crisis, isn't in. Sign here children and it will all be better for today."

      Don't sign a thing until these "plans" are removed. Put obama on the spot and ask him how his plans are going to turn the economy around significantly and with certainty then point out where he's wrong and unconstitutional and where discipline to correct is necessary while this disgrace is fixed with reasonable certainty!!

    7. Bobbie says:

      when you're a government employee with a guaranteed paycheck or a welfare recipient fraud and not, it might look that way…

    8. art says:

      obama, should remember he is a govt employee that won a popularity contest…….now about to lose one.,and with good reason….

    9. john says:

      As a percentage of GDP, tax rates have no affect on the amount the feds steal from the American people. That notion is just another liberal lie or ignorance. The only thing that raising taxes does is slow economic growth. The fact is, that though lower taxes doesn't bring in measurably more or less "revenue" (as a percent of GDP) to the feds, they do allow the economy to grow faster and stronger.

      The economy was far worse in the late 70s early 80s, and Reagan did just the opposite of what Obama did. The results were opposite too. Excessive fed govt spending has never produced a robust economy. It's just silly to think otherwise.

      • kverdeck says:

        You're absolutely right–Reagan increased federal spending far more than Obama has. Most of it was so-called 'weaponized Keynesianism", where he ramped up military spending to unprecedented peacetime levels. But it still worked. As I noted, though, the recession of the early 1980s was very different than the present one, and was easily addressed by lowering interest rates. Not an option now, we're already near 0%.

        And history begs to differ with your argument about taxation. This country's strongest period of sustained GDP growth occurred roughly between the end of WWII and 1979. During that time the top marginal tax rate never dropped below 70% and was 90% for much of the time. Similarly, capital gains were taxed at 25%, not the current 15%. Would we have grown even faster with lower tax rates? Who knows. But it's silly to look at that evidence and say that higher tax rates dampen economic growth, considering what's happened since the Bush tax cuts went into effect in 2001. We've grown like gangbusters since then, eh?

      • Andrew Simopoulos says:

        wrong this is the worst recession since 1980 and was a financial recession, that historically takes 5-10 years to recover from per federal reserve research. we are in year 3. larger gdp drop and way more job losses this time around. also tax rates are lower now than they were during reagan, who tripled the debt, 2nd to none with gwb in 2nd place increasing the debt 120% from 5.6 trillion to 12 trillion

    10. ultimately says:

      ust hours after President Obama declared the private sector was "doing fine" — a comment from which he later backed away — one of the nation's major credit rating agencies affirmed neither the private nor public sector was flourishing.

      Standard & Poor’s affirmed its long-term credit rating on the United States at AA+ and said its outlook remains negative.

      The credit agency made the announcement after Obama's said Friday morning that the private sector is "doing fine" and that the GOP Congress is slowing down the economy. It was immediately pounced on by Mitt Romney and other Republican leaders, resulting in the president backpedaling by the afternoon.

      Read more: http://www.foxnews.com/politics/2012/06/08/obama-

    11. Guest says:

      Why do we still give this man any benefit of the doubt, I.e., that his actions are designed to help the country, when every move he makes has just the opposite effect. Either he is a moron which I doubt, or this is one psychologically scarred man-child acting out his inculcated revenge. It's time for this person to be voted out of office and receive psychiatric counseling before he can cause further damage. The real question that will remain is whether his voting base understands, cares or advocates the damage he has wrought. Lastly a bill should be put forth in Congress to thoroughly vet any future candidates for required skill set and a thorough background check. You fail either you don't play.

    12. kverdeck says:

      Interestingly, only Keynesian theory in general (and IS-LM Keynesian theory in particular) has come remotely close to modeling the world since the collapse of 2008. Austrian economists have warned time and time again that high government debt would lead to runaway inflation and/or high interest rates–neither has happened at all–and they continue to claim that austerity is the magic bullet to fix things, when Europe as a whole has proved (and continues to prove) that austerity only makes things worse.

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