The Economy’s Crisis Ended Under Obama, But...
Posted by Webmaster (+10053) 7 years ago
The Economy’s Crisis Ended Under Obama, But Its Long-Term Problems Didn’t

To understand the dueling narratives of the U.S. economic recovery, look no further than the stories atop the country’s two leading newspaper websites Thursday morning. The New York Times featured a long Sunday magazine story by Andrew Ross Sorkin in which President Obama defended his economic record. (The story was mostly sympathetic to Obama’s argument.) The Wall Street Journal, by contrast, led with the news that the U.S. gross domestic product had grown at a rate of just 0.5 percent in the first three months of the year, slower even than economists’ already pessimistic expectations.

The two stories were discordant but not contradictory. Nearly seven years after the recession ended, the recovery has been at once impressive in its resiliency and discouraging in its failure to gain speed. The usual debate over Obama’s economic legacy hinges on whether he deserves credit for avoiding the worst possible outcome (see also: Europe) or blame for failing to achieve something better. But that argument misses something deeper, which is that Obama inherited two distinct sets of economic problems when he took office: the ones the recession caused, and the ones it merely laid bare. He has made far more progress on the first set.

Most obvious, and most important, are the striking improvements in the labor market. Job growth, after a slow start, is on a record-breaking run, and the unemployment rate has fallen to 5 percent from 7.8 percent when Obama took office. (It peaked at 10 percent nine months later.) Housing, the spark that lit the recession’s fire, is finally recovering: Construction is up, home prices are rising and millions of homeowners are no longer “underwater” on their mortgages. GDP, despite Thursday’s disappointing report, has surpassed its prerecession peak. Household finances, which were battered by the recession, are on a firmer footing today due to low interest rates, a strong stock market and — at long last — rising incomes.

For all the progress, the recovery has been frustratingly slow, and it remains incomplete. Long-term joblessness remains high by historic standards, and even many people with jobs remain worse off than before the recession. But the recovery is real: By virtually any measure, the economy is far better than when Obama took office. (How much credit Obama and his policies deserve for that improvement is a separate debate.)

But Obama has made less progress on a set of deeper, structural problems that began years or even decades before the recession. Among them: slow growth in wages and productivity; rising inequality; falling labor force participation, especially among men; and the decline of manufacturing and the failure to find a new source of middle-class jobs to replace it. The bubble-driven boom of the mid-2000s papered over some of those problems — laid-off manufacturing workers got jobs in construction, families offset reduced incomes by borrowing against their homes — until the housing bust revealed them. The recovery has done little to address these issues; many of them have gotten worse.

Obama isn’t to blame for those problems, which long predate his presidency, and it isn’t clear how much he could have done to solve them even in a perfect world. But they are a big part of why voters are angry about the economy despite so much short-term progress. In new research released this week, MIT economist David Autor and a group of coauthors found that communities that lost jobs to China have become more politically polarized in recent years than parts of the country that fared better. That is consistent with my own anecdotal reporting in Iowa last fall, in which voters expressed long-term anxiety amid present-day prosperity.

In his interview with Sorkin, Obama blames voters’ frustration in part on his own administration’s communications failures. But he seems to grasp there is also something deeper at work. Americans, Obama told Sorkin, “have a sense that it’s a little more of a struggle for them than it might have been for their parents or for their grandparents.” It will be up to Obama’s successor to try to change that.


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Posted by Oddjob (+194) 7 years ago
For starters he could have shrunk the size of government by 25% and not run up another $12,000,000,000,000 in debt. He could have not created the monster of Obamacare and "encouraged" insurance companies to compete in all 50 States..He could have cut the corporate income tax to slow corporate inversions..maybe cut a deal to bring the offshore money back.

He could have closed the borders and stopped another (X) Million illegal aliens from coming into the country. He could have put surcharges on all the non-taxed money leaving the Country through Western Union and a plethora of banks. He could have cut a deal with Maliki to leave enough troops in Iraq to keep the country stable. He could have stayed out of the internal affairs of Egypt, Libya and...etc..etc...etc..

There are a hundred things he could have done but he didn't. And I don't see anything on the list that he couldn't have gotten through Congress unless his own Party stopped him. He may have inherited a mess, but all he did to "fix" it was stir up hate and discontent. I guess Ben Casselman didn't think about those things while he was racking his brain for excuses ....