A couple of months back we posted 9 charts that, at least in our minds, debunked the myth of the “Obama Recovery” despite suggestions from the administration that any such efforts were just a futile attempt at “peddling fiction” (our original post: “These Are The 9 Zero Hedge Charts Showing “Obama’s Recovery” That Angered The Washington Post“).
Turns out that Harvard likes to dabble in “fiction peddling” as well:
In a recent study entitled “Problems Unsolved and a Nation Divided” (study can be viewed in its entirety at the end of this post), Harvard University points out that, despite claims of an “Obama Recovery,” in fact, theU.S. economy has continued to deteriorate in the aftermath of the “great recession.” Among other things, Harvard attributes the economic deterioration to a “lack of economic strategy, especially at the federal level” and a “political system was once the envy of many nations” but has now “become our greatest liability.” Below are a couple of the key conclusions:
America’s economic performance peaked in the late 1990s, and erosion in crucial economic indicators such as the rate of economic growth, productivity growth, job growth, and investment began well before the Great Recession.
Workforce participation, the proportion of Americans in the productive workforce, peaked in 1997. With fewer working-age men and women in the workforce, per-capita income for the U.S. is reduced.
Median real household income has declined since 1999, with incomes stagnating across virtually all income levels. Despite a welcome jump in 2015, median household income remains below the peak attained in 1999, 17 years ago. Moreover, stagnating income and limited job prospects have disproportionately affected lower-income and lower-skilled Americans, leading inequality to rise.
Meanwhile, Harvard points out that “pessimism about the trajectory of U.S. competitiveness deepened in 2016” for the first time in 5 years.
Pessimism about the trajectory of U.S. competitiveness deepened in 2016, for the first time since we started surveying alumni in 2011. Fifty percent of the business leaders surveyed expect U.S. competitiveness to decline in the coming three years, while 30% foresee improvement and 20% no change.
Harvard argues that one of the primary causes of the sustained economic downturn has been a lack of an economic strategy from the federal government which has instead chosen to rely exclusively on accomodative Fed policies.
The U.S. lacks an economic strategy, especially at the federal level. The implicit strategy has been to trust the Federal Reserve to solve our problems through monetary policy.
We assume Chuck Schumer agrees with that characterization…
Meanwhile, Harvard points out that the other key affliction of the U.S. economy is a completely broken political system that is “no longer delivering good results for the average American.”
The U.S. political system was once the envy of many nations. Over the last two decades, however, it has become our greatest liability. Americans no longer trust their political leaders, and political polarization has increased dramatically. Americans are increasingly frustrated with the U.S. political system. Independents now account for 42% of Americans, a greater percentage than that of either major party.
The political system is no longer delivering good results for the average American. Numerous indicators point to failure to compromise and deliver practical solutions to the nation’s problems. Political polarization has especially made it harder to build consensus on sensible economic policies that address key U.S. weaknesses. It is at the root of our inability to progress on the consensus Eight-Point Plan.
With that, here’s a look at some of our favorite charts.
First, the labor force participation rate has continued to decline after the “great recession” and currently stands at the lowest level since 1982.
But the total labor participation rate over the past couple of decades has benefited from women entering the work force. If you just look at male labor force participation the drop off is even more pronounced.
The key problem is that job creation has failed to recover to the levels experienced prior to the “great recession.”
Meanwhile, labor productivity has collapsed.
And, of course, poor job growth and declining participation rates results in lower real household income.
Per the chart below, the only counties across the country that have experienced real income growth in recent years has been areas where the economy is dominated by oil production…ironically, the industry that Obama has tried hardest to crush (as evidenced by his recent decision to unilaterally halt the construction of the Dakota Access Pipeline).
Moreover, people in the lowest income brackets, those Obama claims to care most about, have suffered the most under his presidency.
While stalling in the early 2000’s, entitlement spending has soared under the Obama presidency as investment has declined.
Meanwhile, the Harvard survey finds that all of Obama’s major policy initiatives were identified as the key reasons for our under-performing economy, including, a health care, high personal income taxes, high corporate taxes and a burdensome regulatory environment.
And, lastly, this all comes as the American electorate has completely lost all faith in politicians.