Obama's assessment of the economy reminds many of 2008 Republican presidential candidate John McCain's characterization of the economy. In September 2008, the investment firm Lehman Brothers was collapsing. Wall Street was shaking as the yet-to-be-declared recession deepened, but McCain said: "I think, still, the fundamentals of our economy are strong. But these are very, very difficult times."<p>The reaction to McCain was harsh. His opponent, then-Sen. Obama, pounced: "We just woke up to news of financial disaster, and this morning he said that the fundamentals of the economy are still strong? Sen. McCain, what economy are you talking about?"
The Washington Post said: "Sen. Barack Obama seized on McCain's assessment of the health of the economy, blasting the Republican for being 'disturbingly out of touch' with the reality that everyday Americans face. 'I just think he doesn't know,' Obama said in Grand Junction, Colo. 'He doesn't get what's happening between the mountain in Sedona where he lives and the corridors of Washington where he works.'"
Let's look at the facts.
In McCain's case, unemployment at the time was 6.1 percent and rising. The economy was experiencing "negative growth." But in Obama's case, he correctly states we are in recovery. "The truth of the matter is," said the President, "we have created 4.3 million jobs over the last 27 months."
To paraphrase my grandfather, "Is Obama bragging or complaining?"
Last month, the economy produced a pathetic 69,000 jobs. The National Bureau of Economic Analysis revised last quarter's gross domestic product growth downward to a paltry 1.9 percent.
Economist John Lott points out: "Thirty-six months into the recovery and the private sector hasn't even made up half the jobs lost during the recession, let alone make up for the fact that there are about 7.6 million more working age people than when the recession started. What about the 4.2 million that were lost between when Obama became president and February 2010? The 'growth' just replaces what was lost during the first part of his administration. Let alone the 8.8 million private-sector jobs that were lost between when the recession started."
Do the math.
It takes 150,000 new jobs per month just to keep pace with population growth, those coming into the market from high school and college. Obama's 4.3 million jobs divided by 27 months comes to an average of about 159,000 jobs over that stretch. That is treading water, not even close to the number it takes to make a dent in the 8.2 percent unemployment.
What about the supposedly suffering public sector?
According to Investors.com: "Private-sector jobs are still down by 4.6 million, or 4 percent, from January 2008, when overall employment peaked. Meanwhile, government jobs are down just 407,000, or 1.8 percent. Federal employment actually is 225,000 jobs above its January 2008 level, an 11.4 percent increase. That's right, up 11.4 percent. ... The recession was boomtime for federal employment, especially after Obama took office. Federal jobs kept rising (excluding a temporary Census surge in early 2010) until March 2011 -- more than three years after overall payrolls peaked."
Economist Lott also says the federal public sector is holding up particularly well: "The only group of workers 'doing just fine' is federal government employees, where employment has increased by 4 percent since the start of the recession. In sharp contrast, both private-sector and state and local-government employment have fallen, with the private sector in the worst shape. Private-sector employment is down by 4 percent and state and local government down by half that -- 2 percent. Between 2007 and 2010, annual wages also grew 40 percent faster for state and local-government workers than for those in the private sector."
Our latest recession lasted 18 months, ending 36 months ago, in June 2009. Look at the recovery from the deep recession of the early '80s. At this point during the recovery from that 16-month recession, which began in July 1981 and ended in November 1982, the economy had produced an 8.9 percent increase in civilian employment -- almost 9 million jobs. Real GDP growth averaged over 5 percent in the first three years of the Reagan recovery, compared to an average of 2.4 percent three years into the Obama recovery.
Historically, the deeper the recession, the sharper the bounce-back.
The numbers in the early '80s were grim: a peak 10.8 percent unemployment, 13.5 percent average inflation, prime interest rates at 20.5 percent. But driven by Reagan's policies of lower taxes, slowing the rate of domestic spending and less regulation, the economy staged a ferocious comeback.
Reagan distrusted government and sought to restrain its growth. Obama, the former community organizer, believes government creates jobs and that "social justice" empowers him to redistribute wealth -- according to those he deems worthy.