Sunday, April 22, 2012

What is President Obama's Economic Record, Really?

President Obama's economic record is very simple: he turned an economy in a death spiral into one of modest growth. The Republicans call this failure, but, of course, their policies set our economy on the path to that horrendous free fall and, if they gain power, they will go right back to those same policies.

To see exactly how much improved our economy is, let's look at the numbers on 20 January 2009, when Obama took office, vs 20 January 2012.

When President Obama took office we were losing jobs at a rate of roughly 750,000 per month. Now we are adding something like 200,000 jobs per month. Total improvement, nearly a million jobs per month (1).

When Obama took office the GDP was dropping at a rate of over 8%/yr. Today it is growing at a rate of about 3%/yr, a swing of 11% for the better (2).

When Obama took office the S&P 500 stock index was around 830. Today it is around 1300, an improvement of over 50% (3).

Between 1 October 2008 (the beginning of the federal fiscal year) and Obama taking office, the U.S. government borrowed $502 billion. In the same period this fiscal year we borrowed $446 billion, a 12% improvement (4).

When Obama took office all of the major U.S. financial institutions were in deep trouble, and any number of them could have easily gone bankrupt in a general financial collapse. Today these same institutions are in good shape.

When Obama took office most of the U.S. car industry was on the brink of bankruptcy. Today the US car industry is very profitable and, for the first time in a long time, a U.S. car company, GM, is the biggest car company in the world.

Republicans will claim, of course, that he should have done better. Let's look at the closest comparison: 1929. Not only did we see a similar financial crisis, it was also the last time (before the 2000s) that Republicans controlled the Congress and the Presidency for an extended period.

Unlike this time, after the 1929 crash a Republican president (Hoover) ran the country for three more years on principles not that different from today's Republicans. How did things go? In 1930 GDP shrank by -12.0%, 1931 -16.1%, 1932 -23.2%. In other words, it got much worse every year. In 1933 a Democrat (FDR) came to power and pursued policies similar to President Obama's. In 1933 GDP fell by only -3.9%, in 1934 grew by 17.0% and in 1935 grew by 11.1% (5). I.e., things got better almost immediately.

The Republicans would have you believe that Mitt Romney, who was very good at making money buying companies with borrowed money, can do a better job with the economy than Obama. Maybe. But there is no evidence this is the case. There is ample evidence that Obama can improve the economy, by a lot, and that Republican policies were a disaster the last two times around.

The data are clear: if you want a strong economy, vote for President Obama.

(1) Source: http://en.wikipedia.org/wiki/File:U.S_job_losses_&_gains_during_late-2000_recession.svg for 2009 http://mollysmiddleamerica.blogspot.com/2012/03/jobs-created-lost-february-2012.html for 2012.

(2) Source: http://www.tradingeconomics.com/united-states/gdp-growth

(3) Source: http://www.google.com/finance?cid=626307

(4) Source: http://www.treasurydirect.gov/NP/NPGateway

(5) Source: http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=1&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1930&LastYear=1935&3Place=N&Update=Update&JavaBox=no#Mid

1 comment:

joe said...

Great post, Al. Any chance you'll brush this off and update it with the latest facts & figures? I keep running into people who think we're worse off now than we were four years ago, and it'd be very helpful to have an updated version of this to point them to.