Sep 07, 2011 1:16 PM GMT
It would seem the Obama Administration owns this one if you look at the facts.
What's the difference (in more practical terms) between 2.4% and 5% growth over two years? According to Obama's own budget, this year's GDP will be about $15 trillion. (It's running neck and neck with the national debt.) A 2.6% shortfall, therefore, equals about $780 billion over two years.
If you divide that evenly among the U.S. population of 312 million people, that works out to a shortfall of $2,500 per person — or $10,000 for the average family of four. Call it the Obama penalty.
Some might argue that the anemic post-recession growth rate under Obama has resulted from his having inherited a worse recession than most. There's little doubt that he inherited a particularly long (18-month) and significant recession. But the historical record suggests that, pre-Obama, the general rule was: the worse the recession (or depression), the better the recovery.
In other words, one would have expected such a severe downturn to be followed by a particularly strong stretch of economic growth. That, of course, hasn't happened.
But it has historically. If we look only at the six postwar recessions that lasted at least half as long (that is, at least nine months) as the recession Obama inherited, we find the following:
Average real quarterly GDP growth in the two years coming out of those recessions was 6.2%. The 2.4% figure under Obama has been a mere 39% of that — which, come to think of it, roughly matches Obama's current approval rating.
And strikingly, among those six prior long recessions in the postwar era, even the lowest rate of GDP growth in the two years to follow was 4.7%. That's almost double the tally under Obama.
The worst economy that any American president has inherited, of course, was when Franklin D. Roosevelt took office during the Great Depression. According to the NBER, the Depression actually involved two separate downturns (or "contractions").
The first was from August 1929 to March 1933. The federal government doesn't publish quarterly GDP growth figures from that far back, but average annual real GDP growth for 1934 and 1935 was 9.9% — more than quadruple Obama's 2.4.