Obamalaise Now

Comparisons to Jimmy Carter are getting easier, as the American economy stagnates, the Fed eyes inflation as a miracle drug, and the President indulges in petty spite against his perceived enemies. As Peter Wehner puts it,

So far, President Obama has fallen terribly short of what the citizenry expects of him. He has contributed rather than ameliorated the anxieties and concerns people have. His policies, especially on the economy, are holding us down. Mr. Obama doesn’t seem able to tap into America’s remarkable strengths, spirit, and resilience, which are unique in the world and virtually unmatched in history. Indeed, in some deep way, he doesn’t even seem to recognize them and can therefore hardly acknowledge them.

Campaigning yesterday in Maryland, before today’s uncheerful employment numbers were announced, the President offered a staggeringly incoherent defense of his economic record. He started by accusing his opponents of opposing his agenda not because they regard it as bad policy but in the hope that conditions will get worse:

But, unfortunately, when we arrived in Washington, the Republicans in Congress, they had a different idea. They knew it would take more than a couple of years to climb out of this unbelievable recession that they had created. They knew that by the time the midterm rolled around that people would still be out of work; that people would still be frustrated. And they figured that if we just sat on the sidelines and opposed every idea, every compromise that I offered, if they spent all their time attacking Democrats instead of attacking problems, that somehow they would prosper at the polls.

The implication is, to use that favorite Nixon and Obama word, “clear”: If only the opposition had cooperated in “attacking problems”, the country would be in better shape today.

But then we are informed that the President didn’t need Republican help after all:

Well, they might have thought that playing political games would get them through an election, but I knew it wasn't going to get America through our crisis. So I made a different choice. Instead of playing politics, I took whatever steps were necessary to stop an economic freefall. I did what we needed to do even if it wasn't popular, even if it wasn't easy. . . .

And 20 months later, 20 months later, we no longer face the possibility of a second depression. Our economy is growing again. The private sector jobs have grown eight months in a row. . . . There are 3 million Americans who wouldn't be working today if it weren't for the economic plan we put in place.

As the President acknowledges sub silentio, there is not a single Obama proposal to spur the economy that the Republican minority has been able to block, and what the resulting measures have produced is the slowest, most sputtering economic recovery since the Great Depression itself.

The excuse is that the 2007–2009 recession was so much worse than anybody realized at the time. What is the evidence that all contemporary observers were dramatically wrong? Nothing but the fact that the Obama program’s performance has fallen far short of its promises. The reasoning is a perfectly closed and immaculate circle.

The alternative explanation is that the Administration’s efforts to revive the economy have enervated it instead. We can’t run a controlled experiment to test these theories, but the data suggest that the characterization of the recession as unprecedented and “unbelievable” is greatly exaggerated.

At the depth of the contraction (2nd quarter 2009), the U.S. gross domestic product (in constant dollars) was slightly more than four percent below its figure at the height of the previous expansion (4th quarter 2007). Based on my perusal of the tables prepared by the Bureau of Economic Analysis, that is more severe than any other post-1930’s recession but is barely noticeable next to the 27 percent peak-to-trough decline between 1929 and 1933.

On the surface, at least, the “unbelievable recession” was a sprained wrist, not a pair of broken legs. It was somewhat worse than the 1981–82 recession (a 2.7 percent fall). The recovery has, however, been much weaker. In the first four quarters after the bottom of the earlier recession, GDP grew by 5.6 percent. This time, growth in the same period has been three percent.

More strikingly, it has now been 15 months since the economy began to expand. The unemployment rate at the trough was 9.5 percent. The latest figure is 9.6 percent. At the lowest point of the 1981–82 recession, unemployment was worse, 10.8 percent. Fifteen months into the recovery, it had fallen to 7.8 percent.

It is no doubt just a coincidence that Ronald Reagan pursued economic policies that are almost the direct opposite of Barack Obama’s.