U.S. Economic Performance During Obama’s Stewardship

September 19, 2016

The first presidential candidate’s debate between Donald Trump and Hillary Clinton is a week from today. The winner of the election in November will assume the office of the U.S. presidency at noon exactly four months from tomorrow. That person’s predecessor, Barack Obama, has completed 96% of his stewardship as America’s 44th president. This update analizes the U.S. economy’s economic performance on five vital indicators — growth in real GDP, growth in non-farm payroll employment, CPI inflation, the change in the dollar against the yen and euro and/or D-mark, and the net rise or fall in the Dow Jones Industrial Average. All results are expressed as a percent per year, so as to enable comparisons to be made against the economic performances of the Bush43, Bill Clinton, and Reagan/Bush41 periods.

Real GDP growth: GDP between end-2008 and mid-2016, a span of 7-1/2 years, climbed 1.72% per year on net, very similar to the pace of 1.76% over the eight years of Bush43 but well below 3.80% per year in the eight-year Clinton presidency or the 3.13% growth over the dozen uninterrupted years of Republican rule under Reagan and Bush41. Despite the substantial slowdown of GDP growth this century, the U.S. economy continues to outperform growth in most other advanced economies. Favorable U.S. demographic trends (population growth and the ageing of that population) explain much of America’s continuing lead.

Jobs Growth: Obama took office at the severest part of the Great Recession, inheriting a skyrocketing jobless rate that didn’t peak until the autumn of 2009. Nonetheless, employment on balance has posted annualized growth of 1.00% under his leadership, which is a much faster pace than 0.15% pace during the eight years of Bush43 leadership and direction. Jobs, by further comparison, rose 1.57% per year in the dozen Reagan/Bush41 era and 2.38% per year in Bill Clinton’s two-term stewardship.

Inflation: A multi-decade downtrend in CPI inflation can be observed in the succession of inflation performances from 4.20% per year during the Reagan/Bush41 presidencies, 2.60% per year under Clinton, 2.37% per year when Bush43 held the highest political office, and 1.75% per year so far during the Obama years.

The Dollar: The dollar, which figuratively captures America’s present value as perceived by investors when compared to perceptions of other advanced economies, tends to perform more robustly during Democratic presidencies than Republican ones. Against the Deutsche mark, the dollar fell 1.80% per annum in the Reagan/Bush41 years but rose 3.46% per year in the ensuing Clinton era. It also fell 3.92% per year against the yen under Reagan/Bush41 but only 0.87% per year in the Clinton years. The dollar dropped 4.07% per year against the euro when Bush43 was president but recovered 1.92% per year since Obama became president. Relative to the yen, the greenback lost 3.12% per year under Bush43 but rose 1.56% per year under Obama.

Stock Market Trend: The DJIA enjoyed robust improvement between January 20, 1981 and January 20, 1993 of 10.77% per year in spite of a record single-day 22.6% crash on October 19, 1987. The Dow did even better in the Clinton years, rising 15.94% a year over the ensuing two four-year terms of his presidency. Under Bush43, the DJIA fell 3.51% per year, but the 11.43% annualized share price growth under Obama has been even faster than that experienced in the Reagan/Bush41 years.

Based on the vital criteria examined above, the U.S. economy in the Obama years has not performed as well as one might hope but certainly above what’s generally perceived and also quite a bit more admirably than during the previous presidency of Bush43. One issue, not picked up by this analysis, is the distribution of economic success in America that became increasingly concentrated since the late 1970s. Even on that score, however, some of the damage experienced in the earlier presidencies has begun to get reversed.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



Comments are closed.