So did President Obama save us from the financial crisis and rebuild America’s economic strength?
Most media would have us believe that’s the case. As we previously noted, CNBC’s John W. Schoen reported that, “Obama’s biggest parting gift to Trump may be the economy,” since the unemployment rate has dropped to a nine-year low of 4.6%. AP’s Josh Boak repeated the statistic in an article, “Obama leaving behind much stronger economy.” And there are many, many other examples.
Washington Post columnist Catherine Rampell wrote recently that the president-elect will be taking office with “among the most favorable economic conditions … imaginable.” She clearly does not have a very vivid imagination.
Yet other statistics bear out that Obamanomics has been an economic bust, not a boom. Consider the lack of economic growth. In the 85 years for which the U.S. Bureau of Economic Analysis has calculated the annual change in real gross domestic product (GDP), the period from 2006 through 2015 is the only 10-year period during which annual growth never reached 3%. Before now, the longest period during which the economy failed to grow by at least 3% was the four-year period from 1930 to 1933. That is, during the Great Depression.
Think about that. The Great Depression brought us four years of stagnation. President Obama brought us eight years of stagnation.
Average GDP growth from 1790 to 2000 was +3.78%. During the Obama administration, it was about 2%. In fact, President Obama is the first president in U.S. history not to preside over even a single year with 3% growth.
And it may be even worse than that. A comprehensive new study by Gallup found that the economy has been growing at a rate of just 1% since 2007.
Unemployment Rate Is Still 9.3%
Those who are touting President Obama as an economic savior focus on the lower unemployment rate. Would you consider Preisdent Obama to be an economic savior if the unemployment rate were 9.3%?
Well guess what. It is. That’s the oft-ignored U-6 rate. As CNBC’s Nicholas Wells noted, “The U-6 rate is defined as all unemployed as well as ‘persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the labor force.’ That means the unemployed, the underemployed and the discouraged.”
In other words, when Americans can’t find jobs and are so discouraged they stop looking, the U-3 unemployment rate goes down. When people who previously had high-paying jobs take part-time work for minimum wages and no benefits, the U-3 rate goes down.
Rampell’s column claiming that Trump is inheriting a booming economy mentions the 4.6% U-3 rate and refers to the U-6 rate by saying, “It’s not quite at its pre-recession level, but it has also fallen dramatically.” Why would she mention the U-6 rate, but not give the number after providing the U-3 rate? Apparently, she’s seeking to follow in the footsteps of other Post propagandists like E.J. Dionne and Eugene Robinson.
She also fails to mention the labor force participation rate. Many Americans have left the workforce, because they have reached retirement age. Many have given up looking for work. And many have made unemployment a lifestyle choice. As a result, the labor force participation rated has dropped from 66% in January 2009 to 62.8% in August 2016, which is the lowest number in 38 years. If the Obama administration was creating so many jobs, why did the participation rate drop … even as the economy was allegedly improving?
Today, about 66.6% of American youth aged 15 to 29 are living with their parents, up from 62.8% before the Great Recession.
Income Inequality Increased
With the publication of Capital in the Twenty-First Century and The Economics of Inequality French economist Thomas Piketty brought income inequality to the attention of many and the Democratic party adopted it as its most important economic issue.
Yet inequality increased during the Obama administration. In 2007, before the Great Recession, the poorest 50% of the population held just 2.5% of the country’s wealth. By 2013, that percentage declined to just 1.05%.
“In 2008, Obama spoke of hope for a better future,” Rick Baum wrote in Counter Punch. “If the wealthy hoped for a greater share of the nation’s wealth, their hope was fulfilled while the wealth conditions of most everyone else have declined.”
During the Obama years, real median household income declined 2.3%, the number of Americans living in poverty increased 3.5%, home ownership dropped 5.6% and the number of Americans using food stamps (the Supplemental Nutritional Assistance Program) increased 39.5%.
At the same time, the federal debt has increased from about $10 trillion in January 2009, when it represented 65% of GDP, to nearly $20 trillion today—and it’s at 104% of GDP and climbing.
“Anybody who says we are not absolutely better off today than we were just seven years ago—they’re not leveling with you,” President Obama recently told an audience in Florida. “By almost every economic measure, we are significantly better off.”
In fact, though, it’s President Obama who is not leveling with us.