Election Economics: Assessing the US Economy
Is the US economy less sick? Comparing January 2009 when Obama became president and now, let’s see how its “symptoms” have changed.
Approximately the Same:
- Jobs: During January, 2009, the employment number, 133 million, was very similar to today’s. Unemployment too, was close to 8% then and during August.
- Incomes: Close to $32,000, average real disposable income is pretty close to where it was 4 years ago. By disposable income, we mean the amount we have left to spend after taxes and inflation.
- Homeowners’ Equity: The amount of ownership people have in their houses remains at approximately 40%. (In 2005, homeowners’ equity was far better at 60%. But then the stock and housing markets crashed and we also had the Dec. 2007-June 2009 recession.)
- Gasoline prices: The average price of a gallon of regular gas went up from $1.79 to $3.72.
- Stock Markets: Reflected by the Dow, stock market indices have soared but they are only returning to previous highs that pre-dated 2009.
This Washington Post chart from financial columnist Robert Samuelson summarizes the data:
|Jobs (in millions)||133.6||133.2||-0.3|
|Unemployment rate (percent)||7.8||8.3||+6.4|
|Disposable per capita income (2005 dollars, adjusted for inflation)||$32,417||$32,778||+1.1|
|Average hourly earnings||$22.03||$23.52||+6.8|
|Inflation (January 2009 = 100)||100||107.9||+7.9|
|Gallon of gasoline||$1.79||$3.72||+107.8|
|Dow Jones industrial average||8,281||13,292||+60.5|
|Consumer confidence(1985 = 100)||37.4||60.6||+62.0|
Where does it all take us? To the GDP.
As a measure of our overall health, GDP, the dollar value of the goods and services we annually produce, is an ideal “thermometer.” During the first quarter of 2009, the GDP decreased at a 5.9% rate. Currently, for the second quarter of 2012, it grew 1.7%. So yes, the GDP has improved considerably but, with a 1.7% growth rate, it is still not healthy. (Here is more GDP data from the Bureau of Economic Research, BEA.)
And finally, returning to the candidates, which “medicine” will make the GDP better?Obama/Biden’s government remedies or Romney/Ryan’s business cure?
Sources and Resources: Many of the ideas and almost all of the stats I cite are from Robert Samuelson’s September 6th Washington Post column, “Are Your Better Off Now Than Four Years Ago?” To compare the “better off” question with other presidencies, this WSJ.com interactive is fascinating.
Election Economics Topics:
- Keynesian Economics: 7/17
- Tax Matters: 9/10
- More of the Jobs Story: 9/3
- Aging Challenges: 8/27
- A Healthcare Overview: 8/20
- Paul Ryan and economist Friedrich von Hayek: 8/13
- Unemployment: 8/6
- Minimum Wage: 7/30
- Dodd-Frank: 7/23
- Outsourcing: 7/16