Obama Made It Worse: Reagan GDP Was 9%, Starting With Worse Recession & Higher Unemployment

Obama Made It Worse: Reagan GDP Was 9%, Starting With Worse Recession & Higher Unemployment

The Anemic Recovery

The Obama economic story consists of a near-death recovery that has taken its third dip in three years and stagnating income for most Americans. As the above chart shows, this is the third straight year of a moribund, sputtering recovery.

Indicators of Anemic Recovery:

è     Growth of 4.1% in Q4 of ‘11, declining to 2% in the Q1 ‘12 and now 1.5% in the Q2.

è     Consumption dropped to 1.5%, down from 2.4% in the first quarter.

è     Wages and salaries are barely keeping pace with inflation.

è     Business inventories climbed unexpectedly in Q2 of ‘12, a harbinger of decline in business spending in the next quarter, usually done to clear the shelves.

Comparison To Previous Recoveries

It is important to note that what is happening in the economy, namely an extraordinarily unusual weak recovery, can be legitimately blamed on the misguided, naive, inexperienced, and ignorant Obama economic policies. Previously, what has always occurred after deep recessions, like the one from December 2007 to June 2009, is that invariably such deep recessions are followed by stronger than usual recoveries, as there is more lost ground to make up. Not so with the Obama policies, which are actually hostile to business, by increasing wasteful government spending, and which suck money out of the real economy, which would otherwise have created jobs.

The most recent comparable recession occurred in 1981-1982, after Reagan was elected in November of 1980. As the above chart shows, the Reagan economic policies, including massive tax reform, resulted in an expansion which exploded with a 9.3% quarter and kept up a robust pace for years. By the 12th quarter of expansion, growth popped up to 6.4.%. At this stage of the Reagan expansion, overall GDP was 18.5% higher versus 6.7% Obama, according to Congress's Joint Economic Committee. This puts the lie to the Obama apologists who bleat about how terrible an economy they inherited. The truth is that Reagan inherited a much worse economy, where unemployment rose to 10.7%, which was higher than the 10.1% unemployment peak for Obama. But Reagan addressed the problems with sound, proven policies of less taxes and cuts in spending. Obama did the opposite, and made it much worse.

Comparing the current anemic recovery with the average recovery since the end of World War II, the Obama growth rate is shown to be well below the norm of 15.2%. Currently the U.S. is running about $1.5 trillion of economic output behind where it should be. It is an economic disaster comparable to the Great Depression, and Obama is running away from the issue, focussing instead on fund raising for his

undeserved re-election. He is the worst President since Milard Filmore, and deserves to be thrown out of office.

Impact of Anemic Recovery on Americans

What is the difference between a robust job market and lost opportunity for millions of Americans? It is the difference between a small federal budget deficit and more than $1 trillion for four straight years. It is the difference between a rising or falling poverty rate. The Obama Presidency has been the worst for the middle class and the poor in many decades - arguably the worst in American history.

Recovery Has Been Worse Than Previously Estimated

Not to be overlooked in this tale of woe is the Bureau of Economic Analysis recent revision of the post-2008 GDP numbers, based on the availability of more detailed data. This shows that the recovery was even weaker in 2010 than previously estimated. The growth rate for the first two quarters of 2010 were revised sharply downward, and for the year to 2.4% from 3%. This further discredits the value of the government's 2009-2010 stimulus spending bonanza. Business investment and inventory buildup were both revised downward for 2010, which suggests that the stimulus did almost nothing to boost business confidence.

Failure of Keynes & Obama/Pelosi/Reid Stimulus

According to Keynes theory, government spending is supposed to boost consumer demand such that more business spending will occur in order to meet that demand. Instead the $830 billion stimulus Obama/Nancy Pelosi/Reid boondoggle, which stimulated nothing, and which seems to have created a short-term GDP blip based on government expenditures, but no growth. In return for blowing out the federal balance sheet, Americans got more debt but not more growth. And Mr. Obama says he wants $100 billion in more

stimulus now? Throw the bum out, as incompetent, misguided, destructive to the American economy.

Ideological Economics

The Obama Presidency is the most ideological Presidency in history. It ignored the economic realities, and acted on the basis of socialistic, spread the wealth, totally bogus theories. Obama ignored the supply side: the producers, the risk-takers, the salary earners who put in 50 and 60 hours a week to get ahead. They have been battered by Washington, and no matter how much government lies about trying to conjure growth with more spending and easier monetary policy, businesses won't produce and workers won't work if government threatens to confiscate returns. Which they do with barely disguised arrogance.

Banks lending is minimal, in no small part because of Dodd-Frank's penalties and regulations. As a matter of self preservation and economic survival, investors are sending their money abroad. Why? Because the President is promising to wallop them with huge tax increases on January 1. Why should businesses purchasing new equipment, or hire as many workers, if they are kept in the dark, and treated like mushrooms by Obama, as to what the real costs will be from new regulation and Obamacare. Nobody is willing to fall on their sword for Obama, and nobody has any faith in any of his prognostications, which have been shown time and time againg to be bogus and unreliable.

If this were a normal recovery, investment would be $1.4 trillion higher. Obviously, American investors are finding better returns abroad, and are being chased away from American shores by Mr. Obama's solution, which are to raise the capital gains and dividend tax rates.

Conclusion

One thing is sure - the 1.5% second quarter should solidify in the public mind that President Obama has failed on the economy. Throw the bum out.