How Bad Is Obama’s Record on the Economy? This Bad

We are now nearly five years into the Age of Obama, and I think pretty much everyone understands that, economically speaking, the record is poor. If you think unprecedented levels of unemployment and poverty, declining labor force participation, booming food stamp use and so on are the signs of a healthy economy, then you should be satisfied with the Obama administration. Otherwise, not.

It must have hurt the New York Times to report this, but report it they did: “Many Rival Nations Surge Past the U.S. in Adding New Jobs.”

[C]ontrary to the widespread view that the United States is an island of relative prosperity in a global sea of economic torpor, employment in several other nations has bounced back more quickly, according to a new analysis by the Bureau of Labor Statistics.

Where might that “widespread view” have come from? The Times takes no responsibility.

The government reported Friday that the nation added 175,000 jobs in May, continuing a 32-month run of job gains. The unemployment rate moved up slightly to 7.6 percent, from 7.5 percent in April.

But overall employment in the United States remained 2.1 percent below where it was at the end of 2007, according to the statistics bureau. By comparison, over the same period, between December 2007 and March 2013, the number of jobs was up 8.1 percent in Australia; Germany, the biggest economy in the troubled euro zone, has managed a 5.8 percent gain in employment.

“The United States is way below where it should be,” said Lawrence F. Katz, a professor of economics at Harvard. “We had a massive downturn and a tepid recovery.”

The Times offers several possible explanations for our poor performance, while avoiding the most obvious one: we have an utterly inept government, which, on top of its incompetence, places little value on economic growth.

As the Times acknowledges, the U.S.’s economic performance over the last five years has been awful compared with that of Germany or Australia. But let’s stay closer to home: how have we done compared with Canada and Mexico? Canada has historically been both more liberal and poorer than the United States. Yet in the last few years, with a Conservative government in power, the average Canadian has become wealthier than the average American, for the first time in history. Mexico is, of course, a complete mess, with drug cartels massacring people in the streets. Yet the Mexican government, despite that country’s largely socialist roots, consumes less of Mexico’s wealth than our own governments (federal, state and local) do of America’s GDP.

So how does the current recovery in the U.S. stack up, compared with the same period of time in Canada and Mexico?

Using consistent data on the United States, Canada and Mexico, I plotted GDP growth for the three countries on a quarterly basis from first quarter of 2010 to the present. That timing is significant, because in all three countries the recession was over by 2010 and recovery was in progress. So what we are comparing is the strength of the recovery in the three adjacent countries. This chart shows the quarterly increase in GDP from 2010 Q1 through Q1 of 2013:

As you can see, on a quarter by quarter basis, the U.S. has lagged behind Canada and, especially, Mexico. It is important to understand that this chart is not cumulative; rather, it shows the increase in GDP for each quarter on a percentage basis. If the U.S. catches up in the last quarter, it doesn’t negate the effect of the last three years, in which we have fallen farther and farther behind.

This chart is very simple. It shows the average GDP growth per quarter, for 2010 Q1 through 2013 Q1, for the U.S., Mexico and Canada:

Americans tend to be complacent about our economy. Many, especially Democrats, seem to believe that it produces a bottomless well of wealth from which they can borrow or steal. The truth is quite different. Economic leadership depends on economic intelligence; intelligence which is sorely lacking in the Obama administration. During the Obama administration, the U.S. economy’s performance has been poor, by any measure. We have consistently fallen behind better-run countries like Germany and Australia, and even basket cases like Mexico. Incompetence has a price, and every American is paying it. If high levels of poverty, unemployment and dependence on welfare are your goals, then the Obama administration is on the right track. But when it comes to economic growth–the creation of wealth which generates the jobs on which our children’s futures depend–the administration has been a disaster.

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