I don't really have an opinion on their investment articles, but their economic articles are really funny. Have seen one too many not to give at least some comment..
Obama's Economic Growth Record Is The Worst In 60 Years
0.8% — The Abysmal Rate of Economic Growth under Obama
President Obama's defense of his economic stewardship has effectively amounted to this: At least we no longer have the Bush-era economy. With an entire 4-year term in the books, it's now possible to confirm, and to lament, the essential truth of those words.
Prior to Obama, the second term of President Bush featured the weakest gains in the gross domestic product in some time, with average annual real (inflation-adjusted) GDP growth of just 1.9%. That's according to figures from the federal government's own Bureau of Economic Analysis (BEA).
Obama's first term, however, puts the paltry level of growth during Bush's second term in a newly favorable light. According to the BEA, average annual real GDP growth during Obama's first term was a woeful 0.8%.
To put Obama's mind-bogglingly low number in perspective, consider this: It was less than half the tally achieved during Bush's second term. It was barely a quarter of the tally achieved under President Carter.
It was the worst tally achieved during any presidential term in the past 60 years.
And here's the kicker: If it had been doubled (to 1.6%), it still would have been the worst tally in the past 60 years.
True, Obama inherited a recession, but that recession only lasted for the first six months of his term. Eighty-eight percent of his term was post-recession.
In comparison, that same recession covered fully one year of Bush's second term — a full 25% of it. Yet, Bush's second term witnessed well over twice the growth of Obama's first.
Moreover, the abysmal performance of the economy in 2009 (Obama's first year in office) gave it plenty of opportunity to grow rapidly in the years to follow — there was essentially nowhere for it to go but up.
Misery On Main Street
In fact, the real GDP in 2009 was lower than it had been three years earlier (in 2006). Only two other times since 1932 had that been the case: in 1933 and '34 (during the Great Depression), and from 1946-48 (coming out of World War II).
But it's what the economy did in the subsequent three years in each instance that's striking:
From 1935-37, under Roosevelt, real GDP growth reached as high as 13.1% (in 1936).
From 1949-51, under Truman, real GDP growth reached as high as 8.7% (in 1950).
From 2010-12, under Obama, real GDP growth hit a mere 2.4% (in 2010) — and never again hit even that meager mark in the two years following ObamaCare's passage.
Let's put the above into some perspective:
- Both corporate profits and the stock market are at or near all time highs, but the IBD somehow isn't happy, sort of curious to start off with
- Obama didn't just inherit "a recession," he inherited a depression, one in which the whole financial system froze and GDP at one stage declined by 9%+
- More importantly still, we know that recovery from financial crisis takes much longer (still in doubt, look at the 1930s or Japan post 1990)
- Why is that? Simply, households started to deleverage after $9+ trillion was wiped of their balance sheets due to the housing crash. Deleveraging means spending less and saving more, and deleveraging usually takes years and is the main reason why the recovery was so slow
- Households kept deleveraging even in the face of record low interest rates, which meant that the usual instrument to revive growth, expansionary monetary policy, had little traction this time (although it did save us from a complete melt-down in 2007/8)
- With monetary policy largely ineffective, only fiscal policy remained as a policy instrument, which makes sense. If households are spending less to repair their balance sheets, somebody has to spend more in order to keep the economy from spiralling down, especially since monetary policy lost its edge and the public sector could borrow at record low interest rates.
- There is no reason for business to spend more in the face of low demand and significant unused capacity (which is why they sit on record cash hoards), and there is not much of a credit demand or supply boost as households deleverage and banks are less generous with credit (which is why banks are sitting on a mountain of excess reserves)
- Guess who was dead set against this use of fiscal policy: the very same IBD...
