The Economy Under Obama

Since everyone seems focused only on today's U.S. elections, it could perhaps be interesting to see a summary of how the economy has performed under Obama. Obama doesn't have sole responsibilty for it, in part because Congress and the Fed also influences policies, in part because previous policies by Bush and Greenspan also influences current outcome and in part because factors unrelated to policy affects the economy. Still, considering that his fellow Democrats controlled Congress for the first two years and considering that Obama agrees with some of Bush's policies (on spending and bailouts) and approves of the Greenspan/Bernanke monetary strategy (as evidenced by the fact that he re-appointed Bernanke) it isn't unfair to give him a high degree of responsibility.

So how has the economy performed under Obama? Well, let's look at three indicators: GDP-growth, employment and federal debt.

The GDP number is the one seemingly most favorable for Obama. Nominal GDP increased by 12% between Q4 2008 and Q3 2012, from $14,082 billion to $15,776 billion, which deflated with the 5.9% increase in the gross domestic purchases index implies a 5.75% gain in real GDP., which translates into an annualized gain of 1.5%. Yet while this represents growth, it is the lowest annualized gain of any President since Herbert Hoover, even weaker than the 1.6% annualized increase under Bush.. It is however true that if you separates Bush's both terms, and compares his second term to Obama's first and perhaps only (we'll see about that soon), Obama's term was less weak than Bush's second

But considering that there was a slump at the end of Bush's second term might not be so favorable to Obama considering that deep slumps are typically followed by strong recoveries. For example, during the equivalent period under Ronald Reagan, between Q4 1980 and Q3 1984, average growth was more than twice as high at 3.2%, despite the fact that this period contains the entire deep 1981-82 slump, whereas most of the 2007-09 slump was already over when Obama became President. Obama's recovery has been far weaker than those that followed previous deep slumps.

(All numbers above come from the BEA:s interactive service)

The employment record is far worse. This chart pretty much says it all:

Compare this chart to the equivalent during Reagan:

Finally: then there's the issue of the federal debt. When he was inaugurated, federal debt was $10.6 trillion, . Now it is $16.2 trillion, a $5.6 trillion increase. The increase during less than four years is thus almost as large as the previous record increase of $5.9 trillion during Bush's eight year in office. 

While one can argue over to what extent it is because of Obama, it is thus clearly an indisputable fact that the U.S. economy under Obama has been a failure.