Typically, after the economy suffers an unusually severe recession, it bounces back in an unusually rapid recovery — what some economists and others refer to as the “rubber-band effect.” But not now. Despite the huge worldwide recession in 2008-09, the economy has experienced only a weak recovery, with fewer people employed in America today than when President Obama took office. “At this point in the typical post-World War II recovery, the economy was growing at an average pace of nearly 5 percent. The Obama recovery has managed just over 2 percent.” As James Pethokoukis notes in the New York Post,
A Federal Reserve study from late last year looked at the behavior of recoveries from recessions across 59 advanced and emerging market economies during the last 40 years. The Fed found, to no great surprise, that recoveries “tend to be faster” after severe recessions, such as the one we just had. . .The deeper the downturn, the more robust the rebound — unless government messes things up.
For example, during the 1981-82 recession, output fell by 2.7 percent and then rose by 15.9 percent over the next 10 quarters (at an average pace of 6.0 percent). During the Great Recession, output fell even more, by 5.1 percent. But during the 10 quarters since, total economic output is up only a paltry 6.2 percent. Score one for Reaganomics.
But what about the depressing effect of Wall Street’s near-death experience back in 2008 and 2009? Well, that same Fed study found that bank or other financial crises “do not affect the strength” of subsequent recoveries. . .[What] might explain half of the Obama recovery’s underperformance versus the Reagan recovery. . .? Maybe we can attribute that to policy differences.
While one president cut long-term marginal tax rates, the other tried a massive burst of federal spending. One empowered private enterprise; the other empowered government.
Obama administration policies are preventing more jobs from being created. Obamacare is causing layoffs in the medical device industry, and is preventing some employers from hiring and from making the investments needed for new jobs and expanded operations. The Dodd-Frank law backed by President Obama has also wiped out jobs and driven thousands of jobs overseas. Recent EPA rules will wipe out hundreds of thousands of jobs. Andrew Stiles describes ten job-destroying regulations from the Obama Administration.
Another job-killing regulation is the Obama administration’s recent demand that trucking companies employ alcoholics as truckers rather than assigning them to less safety-sensitive positions — a demand that will lead to costly lawsuits against trucking companies by accident victims, and thus may discourage people from setting up new trucking companies. Another impediment to hiring is the Obama EEOC’s current practice of suing some employers who consider applicants’ arrest records and criminal convictions in hiring. If you were thinking of starting a new business, wouldn’t you be less likely to do so if you thought you would have no freedom as to whom you could hire, and no freedom to consider someone’s dangerousness or the content of their character before hiring them? (Economists say that requiring employers to ignore criminal convictions actually increases minority unemployment). The EEOC is also stepping up its attacks on certain employers who use merit-based criteria for hiring, like requiring a high-school diploma. And it is seeking to impose hiring quotas based on disability on the 200,000 employers who receive federal contracts — that is, the nation’s principal employers.
Contrary to his campaign promise of a “net spending cut,” Obama has substantially increased government spending. Legislation passed under the Obama administration has also required states to increase their spending, and incur large unfunded mandates that will lead either to increased state budget deficits or substantial state tax increases. The $800 billion stimulus package contained so-called “green jobs” funding, 79 percent of which went to foreign firms, effectively replacing American jobs with foreign green jobs. A recent biofuel program actually wiped out jobs rather than creating them as intended, while costing taxpayers a lot of money.
As Terry Catchpole noted earlier in The New York Times, Obama administration policies have wiped out jobs at companies like his:
Two years ago our executive communications company had 17 employees. Today it has seven . . . like many small businesses, we are dependent on big businesses as customers. And the big businesses that we would ordinarily depend on to become clients are sitting on their cash, because they are deathly afraid of an Obama administration that has been hostile to business . . . They have no idea where the administration’s next attack is coming from, and how much it is going to cost them to defend. So businesses do not spend money; they do not hire my company; and we cannot hire back those 10 good people we had to let go.