Saturday, August 23, 2014

The Smoke And Mirrors Of The Obama Recovery

     I recently came into possession of an issue of Newsweek magazine from June 14, 1982. I was attracted to the issue because of the cover story, which hawked the ten year anniversary of the Watergate scandal. The picture on the cover was of Richard Nixon with a sweaty upper lip and downwardly cast eyes, as if he was a nine year old child who had just broken the neighbor's window with his baseball. Of course this was not a look back at what actually happened, but a celebration of the media's accomplishment at having taken down one of their most hated political foes. Even Bill Bradley, editor of the Washington Post during the Watergate scandal, admitted that they created out of whole cloth large swathes of the Watergate narrative for the purpose of making Richard Nixon look worse.
     Even though it was the cover story that attracted me to the issue, it was a story on the contemporary economy that really caught my interest. One must remember that at the time of this issue, Ronald Reagan had been president for about a year and half. This economic article was lamenting whether or not Reaganomics would produce an economic recovery. The author of the article doubted that the Reagan tax cuts would produce anything more than a temporary bump in consumer spending. He also spoke disparagingly about the previous month's jobs data that showed 800,000 new jobs were added to the economy, and 10.5 million people were still out of work.
     During this dragging, slothful, slow-as-molasses Obama economic recovery, the best months have only seen job growth around 200,000, and there are nearly 100 million people without full time work. And yet Newsweek has many times over the last 5 years bragged about the robust recovery that President Obama's policies have produced. The older issue of the magazine in my possession provided a tangible record of the dichotomy that I already knew existed in the media.
     Another gem from the old Newsweek article on the economy was the statement that the unemployment rate was hovering at 9.5 percent. A number which kept decreasing during the Reagan recovery, supported by explosive job growth and a Gross Domestic Product that was advancing by 5-7 percent a quarter, not the 2 percent we now have. Additionally, if the unemployment rate was calculated today using the same formula as in the 1980s, our current rate would be closer to 13 percent, not the fantasy of 6.3 percent.
     One of the first acts of the Obama administration was to change the unemployment calculation to cut out millions of unemployed, thereby giving the illusion of growth. In a nut shell that is the difference between the Reagan recovery and the Obama recovery, the former was constructed of nuts and bolts results, the latter has been mostly smoke and mirrors. 

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