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The Obama Economic Recovery Is a Mirage

For Most Americans Are you better off than you were 5 years ago? Majority answer is no.

Date: Jul 24, 2014

In a speech last week in Delaware, President Obama was positively bursting with pride about what his policies have produced since the economic recovery started five years ago. “Our businesses have now added nearly 10 million new jobs over the past 52 months,” he said. “Construction and housing are rebounding. The auto industry is booming. . . . Manufacturing is adding jobs for the first time since the 1990s. The unemployment rate is at its lowest point since September of 2008.” Obama said that “the decisions we made — not only to rescue our economy, but to start rebuilding it on a firmer foundation — those decisions are starting to pay off.” He continued: “By almost every economic measure, we’re doing a whole lot better now than we were when I came into office.”

(See Graphs in New Page)

If all of what Obama claims is true, that certainly hasn’t sunk in with the public. The IBD/TIPP Economic Optimism Index, for example, is lower today (at 45.6) than it was in June 2009, the month that marks the official end of the last recession (when it stood at 50.8). Just 38% of the public say they’re satisfied with the direction of the country, down from 51.5% in June 2009. Just 19% think the economy will improve over the next six months, compared with 34% five years ago.

Even more startling, five years after the recession ended, 45% think the economy is still contracting; more than half (52%) say it isn’t improving. What do these people know that Obama doesn’t? What Obama didn’t say in his speech is that the recovery he has overseen — which started six months after he took office also has been the weakest on record since World War II. Real per-capita GDP is up just 6% since the recovery started, and if the economy had merely kept pace with the average postwar recovery, total GDP would be $1.6 trillion bigger than it is today.

Job growth is about half the average pace of the previous 10 recoveries — which translates into 7 million fewer jobs than an average recovery would have produced. Nor did Obama point out that, as a result of this anemic growth, many Americans are doing a whole lot worse than they were when Obama’s economic recovery began five years ago. Real median household income is down almost 4% from where it was when the recovery started in June 2009, according to Sentier Research, which tracks such data monthly. During the recession itself, household income dropped only 2.6%, Sentier data show. Real median weekly earnings for full-time workers are also down 3% since Q2 2009, according to the Bureau of Labor Statistics. At the same time, the prices for basics like food and gasoline have climbed much faster than the 10% overall inflation rate. Milk is 25% more expensive; apples are 26% more. Meat prices have climbed 27%; eggs 33%. Gasoline costs a whopping 40% more. Earlier this year, the financial website published a report finding that a median-income household could no longer afford to buy the “average priced” new car or truck in 24 of the country’s 25 largest metro areas. Unfortunately, the value of a home — the biggest asset most families are likely to own — has barely budged. The S&P/Case-Shiller home price index climbed 13% since 2009, putting it just a hair above the inflation rate.

Other indicators that things have gotten a whole lot worse for a whole lot of people since June 2009 follow: More poverty: There were 2.9 million more people in poverty in 2012 — the latest annual Census Bureau figures available — than in 2009. And the number getting food stamps climbed 11 million from June 2009 to June 2014. More are quitting the labor force: In the past five years, 11.4 million people dropped out of the labor force entirely, while the number of people employed climbed only 6.2 million, according to the Bureau of Labor Statistics. Longer average unemployment: Those without jobs are worse off, on average, than they were five years ago, with the average jobless spells going from 23.9 weeks to 33.5 weeks. Much bigger debt: The national debt per person is 40% higher than it was five years ago. A weaker Social Security program: Future retirees face greater financial risk, as the Social Security program’s outlook deteriorated sharply under Obama.

In 2009, the program’s annual report projected that the Social Security Trust Fund had until 2037 before it ran out of money. Now it’s 2030, according to the Congressional Budget Office. The two areas that have done well under Obama are the stock market and corporate profits. The Dow Jones industrial average has nearly doubled since June 2009 and is trading near record highs. And corporate profits in the first quarter of this year were 52% higher than they were in Q2 2009. The problem is that, unlike in previous recoveries, those gains have not made it out into the broader economy. That could explain why, in his speeches, Obama doesn’t ask his audience if they are better off than they were five years ago.