In 2008, presidential candidate Barack Obama ran, not against the promises of Republican nominee John McCain, but against the policies of second-term president George W. Bush. In 2012, Obama apparently plans [8] to run against Bush once more.
Obama sure doesn’t seem to want to run on his record, since the economy is still in terrible shape after three years of his leadership. Instead, it appears he’s going to campaign on the conceit [9] that Bush left him with a much worse economy than anyone—he, economists, Nostradamus—predicted. Obama now would have us believe that his policies prevented an economic slide the likes of which would have made 2010 look like boom times.
That’s a very interesting campaign platform, because even a cursory look at the trajectory of unemployment rates and economic growth in the months following the country’s recessions of the past 50 years shows that the downturn that started in December 2007 is singularly deep, protracted, and devastating. If Obama’s right, and our economy would have been much worse had he not enacted his resuscitating policies, then our country narrowly dodged a plunge to a standard of living on par with that of the 1960s.
Take a look at the following chart, which I generated using data [10] from the Federal Reserve Bank of Minneapolis (hat tip: Robert Tracinski [11]). It shows the percent change in total U.S. employment for all post-World War II recessions averaged together (the red line), and for 2007 by itself (the blue line), for each month after the start of the recession:
[12]
For the average recession, monthly change in employment decreased until hitting rock bottom at -2%, a year after the start of the recession; then headed up to 0% two years out; and finally continued up to 7% five years out.
In contrast, the 2007 recession looks radically different. One year after it began—around the time Obama was elected—monthly change in employment was at the historical average of -2%. But change in employment continued to plummet, down to 6% per month two years out, when by historical trends it should have been back to 0%. Three years out it was still sunk at -5% rather than up at the 3% average. Four years out it had “improved” to -4% rather than the 5% average.
If the average of all other post-war recessions resembles the Little Dipper, the 2007 recession is the Big Dipper.
Think the non-2007 average is hiding wide variation in recovery rates for previous recessions that dwarfs the apparent outlier of 2007? In fact, the chart below shows employment trajectories for each recession alongside the 2007 trend (light blue line at the bottom). The 2007 path was comparable to that of the worst recessions for 15 months; then, three months into Obama’s presidency, it plummeted into uncharted negative territory and has stayed there ever since.
[13]
When liberals blithely claim that Obama has kept things from being worse than they could have been, what they fail to realize is that things are already atrocious by historical standards. Compared to the rapid growth and recovery we’ve always seen after economic recessions in modern times, the 2007 recession is not on par with those recessions, it’s not a little worse, it’s not moderately worse—it’s much, much worse. In fact, it’s not even comparable—it’s in its own separate category.
The seasonally-adjusted percent change in real GDP per quarter is equally sickening:
[14]
Note that for our current recession, quarterly changes are barely above 0%, when historically they should be at 12.5%.
Here’s the graph showing GDP for each recession separately:
[15]
The only post-recession period that came close to 2007?s for change in GDP was 1980?s—and that’s because 1980 began a double-dip recession, the second half of which followed shortly after in 1981, and looked just like the other recessions. Other than that, 2007 stands alone.
Here’s the cumulative monthly increase in number of jobs:
[16]
The average for all non-2007 recessions never even dipped below 0%, whereas for the 2007 recession it went negative for more than 18 months, and has still only recovered to where other recessions were at 9 months.
Finally, here’s the cumulative increase in GDP per quarter:
[17]
The cumulative GDP trajectory for other post-WWII recessions is 1% per quarter. For the 2007 recession, it’s half that.
Here’s a point that can’t be emphasized enough during election season: The recession Obama inherited, and more importantly, presided over and extended, is the worst this country has seen since the Great Depression.
I’ll repeat: The recession that technically ended in 2009, but whose fallout we are still enduring three years later, and 75% of which Obama presided over, is uniquely cavernous, prolonged, and dreadful among all U.S. recessions of the past half-century. Obama is nonetheless campaigning on the platform that, were it not for his $1 trillion stimulus bill, auto company bailout, health care bill, $1- and $2-trillion deficits, record federal spending, and onerous regulations (four times as many in three years as Bush in eight), the United States would be suffering an apocalypse of famine, chaos, and desperation. Does anyone really believe things would have been that much more awful if Obama hadn’t gotten his way?
For those unsure about the hypothetical impact of heavy federal government spending vs. fiscal austerity, or confused by competing Democratic vs. Republican claims about the sources of economic growth, stop and think: Isn’t the notion that recovery from the recession would have looked more like recoveries from all other post-war recessions if Obama hadn’t enacted unprecedented, unparalleled spending at least as likely as Obama’s explanation? Isn’t the fact that Obama did something unmatched in scope in U.S. history capable of explaining a sluggish recovery unmatched in modern history?
Obama’s supporters in the media are right about one aspect of his presidency. It certainly has been historic: historically ruinous for the economy.
