For most of us, the economy is one of the most important issues in this election. But it’s a confusing subject, and it’s difficult to know what to believe. Delving into the facts reveals that the recovery after the disastrous 2008 global economic recession has been remarkably good by many historical, comparative and global standards.
We have been through the worst economic recession since the Great Depression. Back then, it took fully 13 years, major federal stimulus programs and World War II to reduce our unemployment to pre-Depression levels. This time we have recovered significantly in just three-and-a-half years. There are still too many Americans hurting, but the recovery is on the right track.
Unemployment has steadily declined for the past 35 months. The high of 10.1 percent three years ago has decreased to 7.8 percent in September, according to the Bureau of Labor Statistics. There has been a net average annual increase in jobs of 0.97 percent during this administration — a better rate than either Bush achieved.
Health care cost increases have slowed to less than 4 percent for the first time in 50 years, after going up at three times the rate of inflation for a decade, according to a January Health Affairs report.
The U.S. Department of Commerce reported the economy (gross domestic product) has grown steadily for 13 quarters, with an average growth per quarter of 2.2 percent since quarter three in 2009. A May U.S. Treasury report states that since early 2008, the U.S. economic growth has outpaced that of other advanced economies affected by the global financial crisis.
The private sector is leading growth, at a 3.2-percent rate. The Treasury Department points out the following improvements since the first quarter of 2009: overall business investment, up 29 percent; exports, up 23 percent; corporate profits, up 76 percent. The U.S. Department of Commerce has reported that housing construction is up 15 percent in September to a four-year high.
The Treasury Department graphed the shifted economic trajectory after President Bill Clinton: George W. Bush inherited a budget surplus of 2.7 percent of GDP and policies on track to a $5.9 trillion surplus through 2011. However, his policies created deficit spending of $7 trillion (projected through 2011), passing on to the Obama administration the biggest deficit year in history: 9.2 percent of GDP ($1.3 trillion).
Nevertheless, the Obama administration was able to stabilize the economy, though an additional $1.4 trillion deficit spending (through 2011) was required. Dr. Stephen Bloch of Adelphi University analyzed presidential administrations’ effects on the deficit. Using equivalent dollars, his analysis revealed that Obama has reduced the deficit an average of $264 billion per year of his administration, not counting what he inherited his first year: a rate of deficit reduction not experienced since the post-World War II boom. By comparison, George W. Bush added to the deficit an average of $301 billion per year.
Much of the rescue spending has been recovered. Treasury’s projections of loss due to the Troubled Asset Relief Program have been reduced 80 percent from initial estimates, from $341 billion to $68 billion.
More than half of the $79 billion the Obama administration invested to rescue General Motors and Chrysler has already been recovered. The government had stepped in when no private investor or bank(s) were able to supply funds in time to save the companies (a move opposed by Mitt Romney in an OpEd piece in the New York Times). In return, the government was given equity shares, and the companies were required to restructure, streamline and fast-track energy-efficient vehicles. According to the Center for Automotive Research, an estimated 1.41 million U.S. jobs were saved, considering other dependent industries. Loans have been repaid — early and with interest — and all the Chrysler stock has been sold.
Other concerns about tax burden and the size of government are not supported by the data. According to the U.S. Treasury, from 2009 to May 2012, federal revenues (i.e. taxes) relative to the economy have been at their lowest levels in 60 years, at 15.4 percent of GDP (2011). Obama has shrunk government by 569,000 jobs since June 2009 (GDP would be higher otherwise), according to the Bureau of Labor Statistics.
His predecessor grew government jobs by 2 million. A U.S. Office of Personnel Management table showing the Historical Federal Workforce depicts 846,000 fewer federal personnel in 2010 – including Census-takers — than in Reagan’s last year, when we were not at war, our population was lower (up 26.5 percent since then), and there was no Census.
According to a recent poll of hundreds of professional economists by The Economist magazine, “By a large margin [the 363 respondents] rate [President Obama’s] overall economic plan more highly than Mr. Romney’s, credit him with a better grasp of economics, and think him more likely to appoint a good economic team … Half of respondents graded his record as good or very good.”
The data show that under Obama’s guidance, our economy is improving, though at a painfully slow rate for many Americans. If we stay the course, we’ll get there. We’re definitely on our way.
Anita Brosius-Scott has lived in Camden for 19 years. She has served on the Camden select board.