The Obama Recovery Has Been Miles Better Than the Bush Recovery

[applegrove]

The Obama Recovery Has Been Miles Better Than the Bush Recovery

by Kevin Drum at Mother Jones

http://www.motherjones.com/kevin-drum/2014/12/obama-recovery-has-been-miles-better-bush-recovery

"SNIP......................



Do you see what happened? The Bush recovery looks a bit healthier and the Obama recovery looks a bit weaker. Why? Because we added government jobs. Bush got a nice tailwind from increased hiring at the state and federal level. Obama, conversely, was sailing into heavy headwinds because he inherited a worse recession. States cut employment sharply—partly because they had to and partly because Republican governors saw the recession as an opportunity to slash the size of government—and Congress was unwilling to help them out in any kind of serious way.

This is obviously not a story that conservatives are especially likely to highlight. But there's not much question about it. Bush benefited not just from a historic housing bubble, but from big increases in government spending and government employment. But even at that his recovery was anemic. Obama had no such help. He had to fight not just a historic housing bust, but big drops in both government spending and government employment. Despite that, his recovery outperformed Bush's by a wide margin.

There are, of course, plenty of caveats to all this. First of all, the labor force participation rate has been shrinking ever since 2000, and that's obviously not the fault of either Bush or Obama. It's a secular trend. Second, the absolute size of the labor force started out smaller in 2001 than in 2010, but it grew during the Bush recovery, which makes his trend line look worse. Its growth has been pretty sluggish during the Obama recovery as people have dropped out of the labor force, which makes his trend line look better. These are the kinds of things that make simple comparisons between administrations so hard. And as Krugman points out, it's unclear just how much economic policy from either administration really affected their respective recoveries anyway:

I would argue that in some ways the depth of the preceding slump set the stage for a faster recovery. But the point is that the usual suspects have been using the alleged uniquely poor performance under Obama to claim uniquely bad policies, or bad attitude, or something. And if that’s the game they want to play, they have just scored an impressive own goal.


.......................SNIP"

[House of Roberts]

1. No recovery can be robust without domestic production of durable goods.

That's why it was vital to save the auto industry, since it's almost all the durable goods production we had left in 2009.

It's also why comparing the Obama recovery to the Reagan recovery of the early 80s, as we still had much more of that type of manufacturing, and we still protected it at that time.

[Recursion]

3. The US manufactures more now than at any point in history

So, it's probably not that

[House of Roberts]

5. Outside the auto industry,

there's medical devices, aviation, and defense industry manufacturing. I've worked in the last three. Not much else.

Note I said durable goods. That's washers and dryers, microwave ovens, stoves, refrigerators, big screen tvs, computers, plumbing, etcetera. The stuff you can put off buying in hard times, then you want them as your situation eases, which used to make jobs for other Americans, but now those jobs go to other countries.

[Recursion]

7. Heavy plant and prototyping

That's where the growth has been.

(To the first order, we're building the factories China uses.)

[House of Roberts]

8. Heavy plant?

No one uses that in their household.

Prototyping is mostly done via cad/cam until the final stage, so there's little in hard parts anymore, but that's still not household goods.

To fuel a recovery, the goods produced domestically must be bought by individuals who got work and are consuming again.


As an aside to my main point, the 'Bush recovery' didn't have the personal debt overhang that existed when Obama took office. A lot of would-be disposable income was diverted to reducing debt, particularly after the credit companies cut credit lines for even responsible borrowers.

[Recursion]

9. Yes, heavy plant, the most durable of durable goods

To fuel a recovery, the goods produced domestically must be bought by individuals who got work and are consuming again.

True, and that's very different from your original claim, isn't it? This isn't about a "lack of durable goods manufacturing" (that's your supply-side argument), it's about a lack of disposable money in the hands of most people (that's my demand-side argument).

Now, that said, your implication that there's something special about manufacturing as opposed to services is simply wrong. Australia has run a trade deficit for decades, has a larger service sector than the US, and doesn't have the economic problems we do.

Manufacturing is not magical pixie dust.

[House of Roberts]

10. I defined durable goods in post #5

When any demand for durable goods is injected into our country's economy, the recovery will be better if those goods are made here and not in foreign countries.

Manufacturing props up the service sector. I can wash your car each week, and you can mow my lawn in return, but neither of us will survive unless some outside income enters the situation. At the very least, someone has to farm and trade food for services, so that all may have enough. Preferably, goods are produced from raw materials, which creates surplus wealth to purchase services.

Australia has run a trade deficit for decades, has a larger service sector than the US...

Assuming that is true, how much of Australia's wealth production is raw materials? That's the only way a country can have a chronic trade deficit and not go into debt.

[Art_from_Ark]

17. Australia is heavily dependent on extraction industries

particularly coal and iron ore mining

[House of Roberts]

20. Thank you.

That confirms my suspicion.

I knew they were exporting a lot of coal to China. I expect a lot of iron ore is exported to China also.

[IronLionZion]

22. There are household appliances made in USA

if you're willing to find them and pay more for arguably better quality. They are more often luxury items.

The typical American consumer may purchase based on price instead, and that often is made elsewhere or the parts come from elsewhere. A Walmart supplier got into trouble for misleading claims on its packaging for TVs recently, for example.

[Cha]

2. What bush recovery.. bush is the one who caused the meltdown in the first place.

Hey apple?

[applegrove]

4. The slow recovery aftet the dot.com

bust. But yeah. Bush is responsible for letting the banksters get away with murder so to speak.

[Cha]

6. I should congratulate Pres Obama and our country!

[Johonny]

23. you are correct!!! March 2001–Nov 2001 was the time frame of the recession.

The economy slowed at the end of the Clinton administration but went into an actual recession under Bush

[BumRushDaShow]

12. Fox News bubble world.

[MADem]

19. Really! I see he's been shown the door!

Pity, I wanted to give him one of these....

[BumRushDaShow]

21. It's remarkable that he was around for 188 posts

Maybe something that came over from Discussionist...

Love the "fill in the blank" graphic!

[George II]

14. You left out that he was born in Kenya and is a Muslim! Sheesh, where does this stuff come from??

[George II]

13. There was a bush recovery? When?

[Thor_MN]

16. Right before he crashed it the second time...

W gave us two recessions.

[Rex]

15. There was no 'real' recovery after Reagan, Poppy or Dubya.

The only two POTUSes to put us in the black are Clinton and Obama with any substantial REAL recovery of lost wages due to cost of living. Brought about by horrible deficits occurred during spending sprees the neocon would go on each time they got a chance to pillage the Treasury.

It's a proven fact that neocons can manage their own money, but are horrible with other peoples money. They also can't govern worth a shit.

[TheKentuckian]

18. I'm still recovering from the 1st bush recession, in real unadjusted dollars

Accounting for inflation...it is depressing.

The bubbles burst and the next recession always comes before I can climb out of the last hole dug for me or the one before it.

What recovery? That shit is always fables, tall tales, and legends meant to pacify and provide hope to the screwed so the extraction can continue in ever more ways.