Why Obamanomics earns an ‘F’
What’s President Obama’s record regarding economic growth during his five years in office, compared with the average growth rate in economic recoveries from U.S. recessions since the 1960s?
Answer: GDP growth in the Obama recovery is half the growth rate during the other recoveries. On a test, that result would earn an “F.”
Similarly, Obama’s current approval rating on the economy is 42 percent — again, an “F.”
In its May 1 editorial “The Growth Deficit,” The Wall Street Journal provided the official government statistics on annual growth rates during U.S. economic recoveries, starting with the current recovery: “According to Congress’s Joint Economic Committee, average growth over the 19 quarters of this recovery has been 2.2 percent, with total economic growth of 11.1 percent. The average for all post-1960 recoveries is 4.1 percent, with total growth of 21.1 percent. The average for the Reagan expansion was 4.9 percent and total growth of 25.6 percent.”
The Reagan expansion — fueled by across-the-board income tax cuts and business deregulation — cut the level of unemployment in half, from 9.7 percent in 1982 to 5.3 percent in 1989, reduced the poverty rate and slashed the inflation rate to 3 percent, reversing President Carter’s three years of double-digit inflation that cut the purchasing power of American households by nearly 40 percent.
Additionally, the economic achievements of black Americans reached all-time highs during the Reagan years, 1981 through 1989, with an expansion of black employment and real (adjusted-for-inflation) income.
Obama, seemingly more committed to the politics of redistribution than the economics of growth, refuses to acknowledge the aforesaid record of economic successes and failures.
During the first quarter of this year, the slow Obama recovery dramatically weakened, with the expansion of the economy dropping to an annual pace of near zero, to a meager annual growth rate of 0.1 percent during January, February and March.
Further, demonstrating a clear lack of confidence in the business community, the drop in business spending on new equipment in this year’s first quarter was the largest decline since 2009.
Most recently, the Labor Department estimated that the economy created 288,000 net new payroll jobs in April. Investor’s Business Daily reports that the 288,000 figure is impressive “until you consider that a broader job survey of households shows a decline of 73,000 jobs in April.”
The Labor Department also reported that the nation’s unemployment rate dropped to 6.3 percent in April, down from 6.7 percent in March. Again, the headline doesn’t tell the whole story.
Labor Department statistics show that 806,000 people left the labor force in April, dropping the labor force participation rate to 62.8 percent from 63.2 percent, the lowest participation level since 1978.
Explains Steven Pressman, professor of economics and finance at Monmouth University in West Long Branch, N.J., “My first area of concern is that the 0.4 percent decline in the unemployment rate is due to the 0.4 percent decline in the labor force participation rate.”
In short, just the sidelines are getting crowded — not the workplaces.
Ralph R. Reiland is an associate professor of economics at Robert Morris University and a local restaurateur ([email protected]).