Obama’s Economic Track Record: Is America Back on Its Feet?
When President Barack Obama was sworn into office in early 2009, he faced a political climate unlike any that a president had faced in recent memory. Many predicted his utter failure; some even wished for it.
The fact is, Obama walked into a situation in which the United States was involved in two separate wars, a crippling financial crisis, and an upcoming recession. Basically, he couldn’t have been dealt a worse hand. Despite the turbulent start, Obama was able to craft a way through his first term, get reelected to a second, end the wars in Iraq and Afghanistan, and get the economy back on solid footing.
Not a terrible list of achievements, especially considering the undue malice large parts of the population had for him, whether it was based on race or manufactured conspiracy theories regarding his religion or place of birth.
Of course, there have been big missteps during the president’s past six years in office. The failed healthcare rollout, the unconstitutional killing of U.S. citizens, Guatanamo Bay — the list goes on.
But for as much as the president’s adversaries like to paint him as an economic disaster, the numbers seem to indicate otherwise. After the recession officially came to an end in the middle of 2009, the economy has picked up steam and improved to its best levels yet, according to several indicators. Employment is up, the stock market is setting record highs, and corporate profits are as large as they’ve ever been, and yet there are still doomsayers who can’t stop slamming any new idea that comes from his administration as economic suicide.
Case in point: The president announced tough new regulations from the Environmental Protection Agency in hopes that emissions can be cut by up to 30 percent in an effort to curb the effects of climate change down the road. By all estimates, this is probably not enough to actually do anything, but it’s a start. And it’s also a way for the United States to take a position of leadership in reducing emissions and preparing for the future. The general backlash from Republicans was that the idea is so draconian that it could irreversibly wreck any economic progress that has been made.
Will those regulations have an effect on some levels? Most likely. But will the economy be able to handle it? Yes.
That said, Obama has had five years to put his economic policies to work. How has it been going so far, and what can we expect moving forward?
One of the major indicators used by analysts to get an accurate view of the economic climate is the employment rate. For several years, all we’ve been hearing about are jobs. As you can see from the graph above, the financial crisis and recession hit the job market extremely hard, and many people were left without work. But the recovery has been undeniable. The employment rate has officially surpassed pre-recession levels, and the general feeling in the country is that things have returned to normal.
The employment figures do look good on paper, but there is the problem that many of the jobs recovered and created since 2009 are not as lucrative as they were before. A good number of these new positions are low-wage, low-skill, and do not provide full-time hours.
There is also the problem of wage stagnation, but that is something that has been going on for decades at this point. As the recovery continues and the economy continues to grow, the job market will keep improving. It’s hard to say what the standard job will look like in 10 years, but getting people back to work after such a severe drop in employment numbers can be chalked up as a victory for the president.
Activity in the retail sector is in a constant see-saw motion. Typically, retail picks up big time during the winter months and holiday season, and drops off in the springtime. The chart above demonstrates this perfectly. During the years of the recession, the big drop in activity is noticeable. But since then, things have picked up and are on the verge of doubling the levels of money spent in 2009.
Improved retail activity can be a byproduct of an increasing employment rate, and yet the employment rate can also be affected by increased retail activity. The two indicators have a symbiotic relationship, as the more money people are spending, the more companies are able to hire. The U.S. Census Bureau says that for the first quarter of 2014, retail figures have continued to expand, and e-commerce has been a major factor in the positive growth.
“Total retail sales for the first quarter of 2014 were estimated at $1,147.4 billion, an increase of 0.2 percent (±0.4%)* from the fourth quarter of 2013. The first quarter 2014 e-commerce estimate increased 15.0 percent (±2.3%) from the first quarter of 2013 while total retail sales increased 2.4 percent (±0.4%) in the same period. E-commerce sales in the first quarter of 2014 accounted for 6.2 percent of total sales,” the Census Bureau reports.
Gross domestic product
Perhaps the most important economic indicator is that of gross domestic product. GDP is a way of measuring economic output nationwide, by tallying up the value of goods and services produced. A look at the numbers above show a definitive downslide during 2008 and part of 2009. Since then, the numbers have shot back up again. There have been a couple of quarters of retraction, but in all, the chart shows some fairly robust growth.
According to the World Bank, the current GDP for the United States comes in at $16.8 trillion. That is up significantly from the $14.4 trillion at the height of the recession, and the numbers look to only be improving. There are many factors that play into the GDP, and just because the numbers show growth doesn’t necessarily mean the people living within the system are better off. But by economic output, the president has turned things around and gotten the country back on track.
The last big indicator we will take a look at is the stock market. Recently, the Dow Jones Industrial Average hit a record high by breaking through the 17,000 mark. The Nasdaq and S&P 500 were also up, giving more indication that the markets are back to normal.
The fact that the Dow was able to reach such heights is fairly remarkable, considering that during the worst parts of the recession, it dipped down to around 7,000. It’s taken five years for things to get to where they are, but it’s hard to say that investors have had a tough time in the markets under the Obama administration.
Areas of concern
The stock market, employment, and the GDP have all gone up under Obama’s watch, so what aspects of the economy are not doing so well? There are several things to look at, many that could be classified as having a double edge. For example, corporate profits have reached levels that have never been seen before, which, by all accounts, should be regarded as a good thing. When companies are doing well, that’s typically a good sign.
But not necessarily. Increasing profits have come at the expense of the middle class, which has seen wages reduced or stagnated, and many low-wage workers replaced with automation. Executive pay has grown, and the fact is, the vast majority of the gains from the economic recovery have been captured by the upper class and not shared with anyone else.
The housing market has also been an area of concern. Though the market was artificially inflated before the financial crisis hit and was a big part of initiating the recession, the numbers have been up and down. In fact, analysts expect it to be an area of slow growth despite some positive numbers. In many cities, the cost of living is shooting through the roof. It’s hard to predict what exactly will happen in housing over the next year, but it has definitely been an underperforming part of the economy.
One area that needs to see drastic improvement is in the federal debt level. The president’s opponents love to hammer him on this issue, and in some ways, they’re correct. It definitely needs to be addressed, with either cuts to parts of the budget or increased revenue through taxation. No one wants to see their taxes raised, but sacrifices must be made. As far as cuts, looking at the defense budget could be a good start, as well as corporate subsidies.
The Annenburg Public Policy Center, which runs FactCheck.org, has also taken a look at some of the areas where the economy could use improvement. The group put together an infographic that shows there have been undeniable economic victories for the president during his two terms in office, but there is also a lot of room for improvement.
The major issues? Healthcare costs, wage stagnation, federal debt levels, and declining exports.
So has Obama been able to successfully get the economy back on its feet? The answer is that he has, although it’s been a bumpy road, and there are still plenty of issues that need to be taken care of. For walking into office at the time that Obama did, he has done fairly well.
Although the upper classes have benefited the most from the president’s efforts, the rest of us can view this as giving the “trickle-down” economic theory another shot.