It is certainly reasonable for Gilbert Garcia (or anyone) to be skeptical of Trump’s impact on the economy this soon into his presidency. But I think Mr. Garcia paints an overly rosy picture of the Obama economy in his analysis of some of Trump’s statements (“Trump: Recovery that began in 2009 is because of him,” July 29). See Trump claims credit for recovery that started in 2010
Mr. Garcia is right to point out that a recovery that began in 2009 could not have been caused by Trump, who only took office in January, 2017. There is also no question that Trump and his supporters have said things that are just not true.
Mr. Garcia is also right to point out that when we look at the employment picture, including statistics like the unemployment rate and the labor-participation rate, we have to remember that many “baby boomers began hitting retirement age when Obama took office.” But there is a statistic that we can look at to get around that issue.
The Bureau of Labor Statistics reports the percentage of 25-54 year-olds who are employed every month, whether they are in the labor force or not. We don’t have to worry about those who dropped out of the labor force (discouraged workers) that mask the true unemployment rate and we don’t have to worry about people who have retired who might make the labor-participation rate look too low.
These are people in prime earning years and we would like to see them working. But this rate fell dramatically during the recession.
It was 79.7% in December 2007 when the recession started and fell to 75.0% in Oct. 2009. In Oct. 2011, it was a still very low 74.9% while in the intervening two years it never went about 75.4%.
Two years hovering around 75%. How bad is that? Prior to the recession and going all the way back to March 1987, it was never below 78% and there were periods when it was above 80%.
It finally began a steady climb in Nov. 2011, two and a half years after the Obama stimulus package was passed and reached 78.2% in January, 2017, when he left office. Even now, it is just 79.3%. In that sense, we have not fully recovered from the recession.
Yes, we are now close to the 79.7% mentioned above for Dec. 2007. But with about 126 million people in the 25-54 year-old age group, we still have a shortfall of about five hundred thousand jobs.
In 2016, economist Veronique de Rugy reported that “total jobs didn't reach the pre-recession level until July 2014, 6 1/2 years after the recession's onset.” But “2 1/2 years after the start of the 1981 recession (it lasted 16 months), employment had fully recovered.”
Economist Robert Barro (also in 2016) reported "the growth rate of GDP per worker from 2010-15 was 0.5% per year, compared with 1.5% from 1949 to 2009." So yes, after the recession ended in June, 2009, the economy recovered, but it was a slow and weak recovery.
It is true that the last recession was associated with, if not caused by, a very serious financial crisis. Some have said that recoveries are slower in those cases.
But both Barro and Christina Romer (who was chair of the Council of Economic Advisors under Obama), have done research that says that is not necessarily the case. So, looked at in the right historical context, Obama’s recovery might not have been that great.
Was it his fault? That might be hard to determine. But the results were none the less disappointing for the whole country.
See also Stores, Factories Lead This Year’s Unexpected Hiring Boom: Economists expected hiring to slow in 2018 because a tight labor market, the opposite has occurred by Eric Morath. Excerpt:
"Through July, U.S. employers added an average of 215,000 jobs a month to payrolls. That is a marked acceleration from the 184,000 jobs added on average during the first seven months last year. And, well above the 165,000 average monthly employment growth economists surveyed by The Wall Street Journal predicted for 2018 when asked in January."
2 comments:
"Was it [Obama's] fault? That might be hard to determine. But the results were none the less disappointing for the whole country."
Hmmm, you read The Money Illusion and yet you write this! C'mon, Cy, one of the many points on which Sumner should have convinced you is that the business cycle has very little to do with actions taken by the President and Congress. The Fed runs the nominal economy, as he says.
I think your article needlessly reinforces the false notion, held by much of public, that presidents should be judged by the ups and downs of the economy. What you should have tried to tell the people of San Antonio is that neither Obama or Trump has had much to do with the short-run path of the economy, and that presidents should be judged by their effects on its long-run path.
But oh well....
I never blamed Obama for anything nor credited Trump for anything. It was the article by a columnist that I responded to that seemed to me to give Obama credit for what happened
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