On Jan. 27, the Commerce Department reported that the U.S. economy grew at an annual rate of only 1.9 percent for the fourth quarter and that the overall rate of growth for 2016 was a feeble 1.6 percent. During the eight years of Barack Obama’s presidency, the average annual real GDP growth was 1.5 percent — the weakest economic performance of any post-WWII president, and the fourth worst ever.
Investors Business Daily summarized President Obama’s economic legacy with some stark figures: The average growth of real GDP in the 10 most recent previous recoveries from recessions was 33.5 percent; under Obama, it was 17.1 percent.
If the Obama recovery had been merely average, today’s GDP would be $2.4 trillion higher ($19,000 in lost income per household over those eight years). There have been 12 million fewer jobs created than would have happened in an average recovery. Thus, the labor participation rate is three full percentage points lower (62.7 percent) now than it was at the beginning of the Obama presidency. According to economist John Williams, if unemployment were measured the same way it was during the Great Depression, the rate for December 2016 would read 22.7 percent.
There is no way to sugarcoat these results — they are dismal. Some reports blame the sluggish Q4 growth on a rising trade deficit, which cut 1.7 percent from the GDP reading. It is wrong, though, to blame trade deficits for slow GDP growth. During the Reagan boom years of 1983-1988 and Bill Clinton’s best years (1997-2000) GDP grew robustly at the same time that the U.S. trade deficit soared.
Since President Obama occasionally liked to compare his impact to that of President Reagan, consider this comparison: Starting with their first full years in office (1982 and 2010, respectively) to the end of the fiscal year of their last full year in office (Sept. 30, 1988 and Sept. 30 2016, respectively), GDP grew 56.7 percent under Reagan and 24 percent under Obama — and that calculation actually favors Obama, because the recession he inherited had ended in June 2009, while the recession Reagan inherited did not end until November 1982.
The national debt rose under both Reagan and Obama (indeed, the debt has been a chronic and shameful problem for half a century), but during the same time periods just cited, under Reagan the debt increased $1.61 trillion while GDP increased $1.9 trillion, while under Obama, the debt rose $7.62 trillion while GDP increased less than half that amount, $3.6 trillion.
Thus, under Obama, the American people got slower growth accompanied by higher indebtedness. If nothing else, that terrible performance should further discredit the Keynesian myth of government deficit spending acting as an economic stimulus.
Conservatives, of course, dislike slow economic growth and abhor government debt; thus, to conservatives, President Obama’s economic performance was particularly terrible. But what about from a progressive standpoint? From the viewpoint of a progressive, did Obama do better?
To progressives, reducing economic inequality is more important than economic growth. (For example, leftist Thomas Piketty, in his best-seller “Capital in the Twenty-First Century,” praised the Great Depression more than the booming 1980s because wealth inequality shrank in the former and increased in the latter period.) Well, under President Obama, economic growth slowed but wealth inequality rose, too, causing the middle class to shrink.
In short, Obama’s economic record should please nobody, including either conservatives or progressives.
Even the signature piece of legislation that Obama claimed was his crowning achievement, the Affordable Care Act, has wrought economic harm on millions of Americans. For millions, their employer cut their hours (their income) to avoid the heavy burden of Obamacare taxes. For millions of others, health insurance premiums and deductibles rose so drastically that, as The New York Times reported, many Americans no longer feel they can afford exams and treatments.
For eight years, Barack Obama’s presidency was disastrous for jobs, business, and the middle class. Let us hope that the new administration can undo some of the damage.
[Dr. Mark W. Hendrickson is an adjunct faculty member, economist, and fellow for economic and social policy with The Center for Vision & Values at Grove City (Penn.) College.]