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Obama’s ‘Recovery’ is Worse Than Recession

By: Daniel Horowitz (Diary)  |  September 27th, 2012 at 03:34 PM  | 

RESIZE: AAA

Here we go again.  GDP growth for Q2 of this year has been revised down to 1.3% from 1.7%.  Our GDP now stands at $15.585 trillion, while our debt (including intragovernmental liabilities that must be dealt with) is $16.022 trillion.  Durable goods orders have dropped 13.2% in August, the largest dip since January 2009.  Orders for July were revised down.

Folks, this is not endemic of a recession.  It’s worse than that.  This is a sickly recovery.

The problem here is not the recession that Obama complains he inherited.  We are no longer losing jobs and GDP is no longer contracting.  The problem is the recovery.  In fact, we began recovering jobs and GDP during the spring of 2009.  So yes, the business cycle tends to endure, irrespective of who is in the White House.  There was a very deep recession at the end of Bush’s term, and that recession ended in 2009.  The same way Obama cannot be blamed for the initial recession in 2008, he cannot take credit for the immediate end of the recession so early in his term.

What is unprecedented and what is Obama’s fault is the ensuing lack of recovery.  We have never had a recession in which we did not emerge from it in a stronger position.  This recession is analogous to a 1,000-foot ditch.  We stopped falling deeper into the hole in June 2009.  However, instead of digging out of the hole, we are permanently coasting near the bottom of that trench.  Hence, the protracted stagnation is much worse than the abrupt recession.  It is this stagnation that Obama owns as a result of his intervention into every sector of the economy.  The over 80 million hours of Obamacare rules and regulations that businesses must comply with is just one example of why the economy will never recover.

Take a look at this GDP chart posted by James Pethokoukis at AEI:

As you can see, the hemorrhaging stopped shortly after Obama took office.  What has ensued is an unprecedented period of lethargic growth.  We’ve never seen such weak growth in all the fundamentals of the economy this late after the recession ended.  During the first two quarters of 1984, the economy grew by 8% and 7.1% respectively.

Romney must not let Obama get away with blaming the current economic malaise on the previous administration.  Back in 2009, Obama bragged about the end of the recession.  If the recession ended in 2009, the unprecedented lack of recovery that we are now incurring is due to his overly regulated crony capitalist economy.  It’s the recovery stupid.

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  • azrally

    Not only is the recovery stagnant from the national GDP point, see this article at TWS: http://www.weeklystandard.com/blogs/americans-incomes-have-fallen-3040-during-obama-recovery_653116.html
    The average American’s income has fallen faster during the “recovery” (5.7%) than it did during the recession (2.6%). That is shocking information, and it is from the Census bureau, and uses 2012 adjusted dollars. I think that it shows the effects of QE1 and 2.

  • Dave_A

    A larger population means a higher demand for goods and services – eg more jobs.

    The pool of wealth, and the economy, are not fixed in size. Each new person requires additional economic activity to live…

  • Dave_A

    There is nothing wrong with our trade policy…

    There are issues with employment in the US, mostly with politicians coddling and protecting manufacturing – creating a falsely inflated pool of insufficiently skilled laborers…

    But the solution is NOT a return to the domestic production of consumer goods, 1950-style, at 2012 market-wages… The result of that would be disastrous, as it would raise prices for all, for the benefit of a small segment of the population which lacks competitive job skills. And unlike inflation, there would be no benefit from rising asset values.

    Essentially, it would have the same impact on those producing the goods, that welfare has on the unemployed.

  • Dave_A

    Finally some good economic analysis on RS…

  • Robert Barker

    Dave_A: There is something wrong with the trade policy, but not what most are thinking. We are stifling trade with quantitative easing, which makes the dollar cheaper and foreign goods more expensive. In order to protect themselves, Europe, Japan and China are having to do the same. It’s as if everyone raised tariffs at the same time. Remember the Smoot-Hawley Act of 1930, which led to depression and war? QE is having the same effect on international trade — UPS is having a great domestic market, but announced last week that its international business is off. Cargo liners are raising rates because they cannot recover their overhead and costs on the current volumes. This is a disaster economy.

  • jaykali

    Ya I agree, therefore its incumbent on the candidate to explain it to the masses. I think Chris Christie or Marco Rubio and others are examples of politicians who do a really great job of that. And where are they btw? I wish his all-star surrogates were out on the stump with him more often and on the Sunday show circuit more often. I don’t understand why they aren’t. Romney should be quoting Bill Clinton. Clinton is a double agent for sure. Romney should be using his words against Obama. Romney’s pitch just isn’t piercing. I mean when I hear him speak, it makes sense. But it doesn’t feel like a closing argument, it feels like an opening argument. He needs to really drive in the points that Obama is completely incompetent.

  • commonsenseobserver

    Team Romney should make an ad like this: http://www.youtube.com/watch?v=fZgQhnNRSuw
    Responding to Obama’s new ad. http://hotair.com/archives/2012/09/27/obama-ad-time-for-a-new-economic-patriotism/

  • celador2

    My income has dropped due to no interest on my savings in CDs. We now must wait until mid 2015 before Fed Res will consider raising them. The big losers in Obama recovery may not just be jobless folks, but savers.

  • lovethemiddle

    Many on the Left are calling for Romney to get more specific. And “go to my website and learn more about my policy” is not an answer. Both Romney and Ryan need to get their messages straight and begin to get very specific about what exactly they intend to do differently than the current administration. Otherwise, there is no reason for Undecideds and those voters who are still on the fence. “Better the Devil you know” certainly applies here without any new and/or different information.

  • streiff

    this is nonsense.

    1. There is no reason for Romney to respond to anything from the left. They aren’t going to vote for him.

    2. The incumbent has offered no specifics for five years (four in office, one running for it), why should the challenger.

    3. If you aren’t interested enough to go to Romney’s website to get the details you aren’t interested in them.

    4. Why would responding to a critique from the left help Romney with undecideds? It wouldn’t. Romney can win this election by hammering on the economy and saying “I’m not Obama.”

  • Dave_A

    Uh, no.

    QE is a good thing. There can be no recovery without inflation.

    The 1930s are a perfect example – that was DEFLATION.

    As for relative currency values, perpetual inflation is the predominant condition of currencies world-wide, with a few outlier exceptions.

    The reason for this, is that people world-wide tend to spend instead of save (especially Americans) and in a spender-society your economy MUST experience perpetual inflation or it will STAGNATE and DIE…

    One of the greatest problems we have right now, is that inspite of QE(x) and ZRIP, we still can’t break out of 2%-and-below inflation.

    GDP growth and inflation are essentially joined at the hip. There will be no GDP growth if we can’t get a reasonable rate of inflation going first.

    Remember: Spenders and asset-investors fuel economic growth. NOT CASH HOARDERS.

  • Dave_A

    It should be noted that essentially every ‘way’ the Dems have come up with to blame Bush for the recession, is a policy Obama has either kept in place or doubled down on…

    The only thing Obama did, was find worse things to spend money on than Bush (eg, war actually produces positive economic developments… Digging & filling in holes in the street does not)….

  • Dave_A

    No, actually, it has nothing to do with QE. At least not in a near-zero-savings economy, like ours.

    It has to do with increased regulatory costs & the economy-wide impact of the same.

    Inflation is an economy-wide phenomenon. It raises the dollar-value of your labor at the same time it raises the price of the goods you buy.

    All other things being equal, the end result is a zero-sum effect unless the inflation happens so rapidly the economy can’t react to it (and that never happens due to ‘money printing’ – hyperinflation only happens when politicians literally shut down the economy via bad political (not monetary) decisions).

    Now, in reality there are some things that lag, and some things that lead this effect – but the long-term result is still zero-sum.

    WHAT ACTUALLY DOES DESTROY RELATIVE INCOME, is regulatory cost increases & obstructed critical-resource production….

    Eg, when the cost of regulation increases business costs, that will lead to price increases that are NOT offset by higher labor-values (because the value of money hasn’t changed, the value of your labor is still the same – but prices are still going up)…

    Same for when policy restricts energy production, causing economy-wide price increases – again without a change in the value of money.

    Neither of these things are ‘inflation’ but both raise prices WITHOUT an equivalent rise in wages…

    And there goes your purchasing power….

  • bbjaylive

    Actually, QE is nothing more than an asset swap that will do nothing for the economy.

  • Dave_A

    Yes and no…

    Due to the way it is being done, it functionally increases the available money supply…

    Which functions to counteract deflationary pressure, and if done just right, to fix the ‘insufficient inflation’ problem.

  • commonsenseobserver

    Well, unlike Obama, Romney needs to establish his credibility after months of attacks on his record, whether in business or public service, as well as his vision. Offering greater clarity would allow voters to understand the substance of his plans easily, which they do not now, as well as trust them.

  • commonsenseobserver

    Insufficient inflation is hardly the most pressing of our problems.
    Neither is hyperinflation, of course.
    I think they will be able to maintain price stability while ensuring maximum employment if our fiscal policies were actually sound.

  • Dave_A

    Monetary policy is driven by personal/business spending habits, not government fiscal policy.

    And there is no reason to desire price stability, since there is no positive economic impact in a spender’s society, from stable prices.

    Also, with price stability comes wage stability, and people are NOT going to like that (no raise for life, unless you get a promotion or learn new skills).

    The economic mindset of the American consumer demands inflation.

    That same economic mindset (and the minor detail that a larger economy REQUIRES a larger money-supply, unless you live in Democrat-style fixed-wealth-pool fantasy-land) has made it so you cannot grow the economy WITHOUT inflation.

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