Wednesday, August 6, 2014

Obama's Economy: How Does It Compare To Other Presidencies?

We hear a lot of rhetoric these days on the talk news shows about how good or how bad Obama's economic policies have been for America.  The Right would have us believe that Obama is the worst President ever and has destroyed America, while the Left would have us believe that Obama has been the best President ever and has done more for the middle class than any of his predecessors.  The truth, as usual, is somewhere in the middle.  So let's look at the facts:

One of the most devastating aspects of the 2008 recession was the advent of the subprime mortgage-backed security ("SMBS") which married the housing market to Wall Street and ultimately led to the downfall of both.  Once the SMBS market crashed, the housing market was thrown into chaos bringing home prices to record lows.  More than 4 million homes went into foreclosure between 2006 and 2011.  So how have home prices done under Obama?  According to the S&P Case Shiller 20-City Home Price Index, home prices, which were in free fall when Obama took office in 2009, have actually increased by over 15% since hitting their lowest point in 2012 (see the blue line below):

The Stock Market:
As mentioned above, the housing crisis in 2008 walked hand in hand with the stock market downturn.  The stock market itself (which many would argue is more of a measure of how the top 1% spend or don't spend their money than it is an indicator of how the average Joe is doing financially) had plummeted to recent lows in 2009 when Obama stepped into office.  Indeed, the Dow Jones Industrial Average (a metric commonly used to measure the stock market's vitality) fell from a record-high of 14,164.53 in 2007 to a rock bottom low of 6,547.05 on March 9, 2009, just barely over 1 month after Obama first became President.  How has the market done since Obama took office? According to the Wall Street Journal -- which to be sure, is widely accepted as a Right-leaning publication -- the S&P 500, the Dow Jones, the Wilshire 5000 and the NASDAQ have all increased between 100 to 200% since Obama took office.  Indeed, as of the writing of this post, the Dow Jones is currently at 16,429.47 - almost 3 times higher than where Obama found it a month into his presidency.

Median Incomes (adjusted for inflation):
According to the U.S. Census Bureau, median household incomes peaked under President Clinton at around $56,000/year in 1999 and have been on the decline ever since.  Under President Bush (43), median household incomes fell to about $54,000/year in 2004 before rising again during the height of the SMBS bubble to just under $56,000/year in 2007.  Under Obama, median household incomes have dropped to about $51,000/year which is a 20-year low.

January 2008 was the last month of job growth under past President George W. Bush; 15,000 jobs were added that month.  The following month in February 2008, the economy lost 86,000 jobs, and each subsequent month thereafter in 2008 saw monthly job losses until it finally hit rock bottom in March 2009.  In that month alone, America lost 826,000 jobs.  In direct response to America's economic crisis, Obama signed the American Recovery and Reinvestment Act of 2009 (better known as the "Stimulus Bill") into law on February 17, 2009.  One of the primary goals of the Stimulus was to stop job losses and to create job growth.  While there is still debate as to whether the Stimulus worked as quickly as other alternative solutions, the one thing that is certain is that after it was passed, monthly job losses began to decrease and job growth began to increase.  By January 2010, the country saw its first month of positive job growth since the 2008 recession began; 18,000 jobs were created that month.  Last month in July 2014, 209,000 jobs were added to the economy which marked the 6th consecutive month of job growth where over 200,000 jobs/month have been created.  Unemployment is currently at 6.2% - when Obama took office in 2009 unemployment was hovering between 9 to 10%.

But how does Obama's job growth compare to other recent presidents?

At the top of the list is Bill Clinton who, over the course of his 8 years, added a net gain of over 22 million jobs to the economy (over 11 million per term).  Coming in at number 2 is Jimmy Carter, who had a net gain of over 10 million jobs during his 1 term in office.  Number 3 on the list is Ronald Reagan who added nearly 15 million jobs during his 8 years in office (roughly 7.5 million per term).  Even though his second term is not complete, Obama ranks at number 4 having realized a net gain of over 5.1 million jobs during his almost 6 years in office (slightly over 2.5 million per term, and growing).  Coming in at number 5 would be George H.W. Bush (41) who saw a net gain of 2.5 million jobs during his 1 term.  At number 6 would be Gerald Ford with a net gain of just over 2 million during his partial 1 term.  And bringing in the rear at number 7 is George W. Bush (43) who had a net gain of 1.1 million jobs over his 8 years in office (roughly 0.55 million jobs per term).

So when it comes to job growth and many other metrics that we use to measure the economy, Obama is not the best of the recent Presidents.  Nor is he the worst.  According to the factual data, he is currently somewhere in the middle.

blog comments powered by Disqus