Six Ways of Looking at Obama's Dismal Economic Performance


John Merline of Investors Business has put together six charts and an article that lay out an economic case against rehiring Barack Obama's for another term as president.

"President Obama has a simple and straightforward argument" for re-election, he writes

Things were terrible when I arrived, he says, thanks to Bush-era policies of tax cuts and deregulation. We stopped the decline, but the ditch was so deep that it will take time to get out. Still, we are making progress, even if it isn't as fast as everyone would like.

Merline notes that "more people continue to blame Bush than Obama for the current poor state of affairs" but argues persuasively that the current president is mostly abdicating his role in things. Here's an example:

Obama dismisses the slow and painful recovery by saying that he knew the road would be long. "I always believed that this was a long-term project (and) that it was going to take more than a year," he has said. "It was going to take more than two years. It was going to take more than one term."…

[But] Obama's first budget, released in February 2009, predicted "rapid growth" that would "push down the unemployment rate to 5.3% by the end of 2013." In March 2009, Obama boasted that "my long-term projections are highly optimistic."

In August 2009, his economists predicted economic growth rates above 4% this year and next. In April 2010, Vice President Biden predicted job growth of "between 250,000 and 500,000 a month."

It was only after the actual results starting coming in far below expectations that Obama started laying blame on the financial crisis and asking for more time.

And his claim that financial crises inevitably lead to sluggish recoveries is at least open to debate.

While some economists make that claim, others dispute it. A November 2011 paper by economists at Rutgers University and the Cleveland Fed, for example, concluded that "recessions associated with financial crises are generally followed by rapid recoveries."

Read the whole thing here or by clicking on the image above.

Regardless of the election's outcome, I'm hopeful that we'll start having a better discussion about the actual effects of the past three-and-a-half years of "bold, persistent experimentation" in terms of economic policy (to use Obama's favorite borrowed phrase of Franklin Roosevelt's). I think Merline's charts and analysis is generally right in implying that Obama's interventions didn't just fail in their intentions but that they extended and exacerbated the problems.

But here's something for Republicans to drill into their heads: It's also true the George W. Bush bears a good chunk of responsibility, both for pursuing policies that inflated the housing bubble at the heart of the recession and for going nuts in terms of his own bold, persistent experimentation, especially in the last year of his presidency when he infamously "abandoned free-market principles to save the free-market system."

The 21st century (so far!) has been an unrelieved period of activist government and we're reaping the bitter harvest of that right now and, sadly, for a lot of years to come. Partisans will always use the rotten economy as a way of regaining power, but unless the eventual victors learn what's causing the long, painful slide we've been in and reverse course, we're never going to pull out of it.

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  1. If Obama manages to pull it out and win, I vote Krugabe for Treasury Secretary and/or Chairman of the Federal Reserve.

    Give him his shot.

    Until he gets his shot, the response to all these charts is going to remain “We didn’t print enough money because of those darn Republicans!”

    1. It won’t change a damn thing. Japan has been QEing themselves for 20 damn years and yet Krugabe and his cohorts still don’t get it. You can’t print yourself out of a hole. I can hear it now, “We didn’t have enough time, the damage that the Republicans did was so deep that we need more time to fix it.” Even though the Republicans fiscal policy doesn’t differ that much from theirs.

      1. They didn’t have the right “Top” men. We do now, and if we re-elect Obama we will continue too.


    2. I’m a bit confused why the top right chart (“Obama didn’t stop the Great Depression”) works as an argument against him…

      1. Same here. I think they need to stretch out the timeline more, to capture more of the astounding spending and anemic growth.

    3. If Obama pulls this out despite that those six graphs, he truly is the Messiah.

  2. Bush famously abandoned just about every limited-govt campaign promise.

    Welfare programs: check
    Security state: check
    Fiscal: check
    Foreign policy: check

    1. Bush was elected President and did take an honest shot at Social Security reform. Nobody in Congress from either party supported it. Should he have written an Executive Order?

  3. The password is “Unexpected”.

  4. The chart is good, but the pictures of Obama aren’t really speaking to me. Or texting to me.

  5. The evidence is clear that Bush was truly a 3D chess Master, setting Obama up for all this failure.

  6. The final paragraph should be on a statue somewhere.

  7. NFP has unemployment at 7.8%. Yeaaaaa! Obama takes out Osama AND saves the economy!

    1. I have to go to work. Hell, I probably have TWO jobs now!

      That Ben Bernanke is a genius!

    2. Total bullshit number. How many people left the workforce for that to go down so much?

      1. So many new jobs we’ll have to re-legalize child labor!

      2. Labor participation rate is around 63.6. Basically the lowest in three decades.

      3. Also, how much of this is seasonal construction labor that will disappear when the northeastern weather starts to degeade? One eould think overall non-farm employment should surge during the summer for road work and other construction.

  8. AP is reporting that jobless rate fell to 7.8%.

    The U.S. unemployment rate fell to 7.8 percent last month, dropping below 8 percent for the first time in nearly four years. The rate fell because more people found work, a trend that could impact the presidential election.

    The Labor Department says employers added 114,000 jobs in September. The economy also created 86,000 more jobs in July and August than first estimated. Wages rose in September and more people started looking for work.

    Which seems weird, because economists were estimating 110K added jobs, which would cause the unemployment rate to bump up to 8.2%.

    Smells fishy

    1. The downward revision will come post-election. Every number for the last several months has been revised disappointingly down.

      1. OK, so the GDP numbers have seen downward revisions but jobs numbers upward. The numbers remaining in the workforce are also subject to change. When the data are so flexible from Monty to month, what conclusions can really ever be reached? Or from a political perspective, what conclusions cannot be reached?

    2. The U.S. unemployment rate unexpectedly fell to 7.8 percent last month, dropping below 8 percent for the first time in nearly four years.


    3. I remember always hearing that we needed 200k new jobs a month to break even. Maybe that number has dropped with the lack of immigration incentive, but I can’t imagine it dropped to half.

      1. Back when, Calculated Risk posted a graph showing the projection at 125000 hobs added per month putting a break-even point for employment at November 2015.

  9. This was reported by the AP before the jobs report was issued:

    WASHINGTON (AP) ? With a month to go until the presidential election, the government on Friday issues its September jobs report, expected to show an uptick in the U.S. unemployment rate after employers added only a modest number of jobs.

    Economists forecast that the unemployment rate edged up last month to 8.2 percent from 8.1 percent, according to a survey by FactSet. Employers are expected to have added 111,000 jobs.

    That would be an improvement from the 96,000 jobs gained in August. But that is still barely enough to keep up with growth in the working-age population.

    So, 111,000 jobs added equals unemployment increasing from 8.1% to 8.2%, but 114,000 new jobs was enough to get us down to 7.8%?

    I call bullshit

    1. The majority of the change comes from an upward revision to July’s number. Seasonal construction work, I would imagine.

    2. Household survey data, which includes self-employed and unpaid family workers, etc, supposedly added 873K jobs.

      1. Did you sell anything on eBay or through a garage sale? Yes? EMPLOYED.

  10. How come the first two charts helpfully leave out the last year of the Bush administration? Meanwhile the third chart includes the last year of the Bush administration as part of the Obama administration?

    1. Good questions. If you have to play with time scales to make your point, it degrades the impact of your message.

  11. I know Obama’s a liar as much as the next guy, but there is definitely some team bias going on in that article. I’m not sure showing deficits as a percentage of GDP really tells us anything. Also, is the war spending included in these numbers? I know most of it was paid for with off budget emergency spending.

  12. Those charts are terrible. Cherry picking data sucks when politicians do it and it sucks when Reason does it.

    1. Well, technically when BI does it.

    2. Re: duff,

      Those charts are [making the president look] terrible.

      There. More accurate.


        /runs away sobbing

  13. Bush bears a good chunk of responsibility, both for pursuing policies that inflated the housing bubble at the heart of the recession and for going nuts in terms of his own bold, persistent experimentation,

    I remember having several conversations before the crash with “old-timers” about how Bush wasn’t a “republican”.

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