There's a certain degree of circular logic engulfing discussions about today's economic conditions and it goes something like this...
President Obama inherited the worst economic situation any president has inherited since FDR, so it will naturally take longer to dig ourselves out of the Great Recession than it did to dig ourselves out of any economic downturn since The Depression. Certainly, the economic turmoil in late 2008 and the ensuing collapse in 2009 were much more severe than your average cyclical downturn. The problem with claiming President Obama inherited the Great(est) Recession is that the standard economic metrics of GDP loss, the gap between real GDP and potential GDP, inflation rates, and unemployment *at the time he was sworn in* simply don't support the claim. But it is certainly true that President Obama walked into the early stages of a recession, and the factors that drove the recession elude standard economic metrics. For instance, how does one compare the deregulatory environment that helped fuel the financial\housing crisis in this recession compare to the regulatory changes that helped fuel the savings and loan\commercial real estate crisis of the early 1980's? Or how does one factor in the global interdependency of the highly complex (and sometimes illegal) financial instruments of today compared to the wild-west (and sometimes illegal) mentality surrounding the introduction of digital technology to the financial markets of 1980?
Where the standard, objective, economic metrics may demonstrate that the situation President Obama inherited was short of earning the Great Recession moniker, our inability to measure the subjective factors that worsened the recession shouldn't preclude us from admitting\allowing that it was much worse than the objective metrics indicate. Yet there is measurement that should receive a great deal more scrutiny than it does, because it leads to circular logic....the length of the recession. It seem absurd to say that the longer a recession lasts, the deeper the recession the president inherited was. So the duration of a recession isn't influenced, either positively or negatively, by economic policies implemented by the president or congress? Either government policies can, or can not, influence a recovery, but as soon as you implement those policies you begin to own the length and depth of the recession.
Let's take a look at what is probably the single most important metric going into the 2012 election, unemployment, and compare it to the recession of 1980-1982. I picked that one for two reasons, first, it shares many of the same underpinnings that caused our current recession and second, because a different set of economic policies, but more importantly a different style of presidential leadership, were used to turn the economy around. Below is a graph demonstrating the percentage change in employment (the inverse of U6) in the 3 years immediately after the recessions ended based on GDP growth.
President Obama has, and so did President Reagan, unique speaking skills that set him apart from every other political leader in the US...probably the world at this point. Both presidents were elected based on deep and widespread disappoint with the previous administration's handling of the economy, and won by tapping into a theme of change and prosperity. President Obama has to, and so did President Reagan, deal with a hostile congress that fervently believes his policies are destroying the country while enjoying the full backing of their own parties. Finally, both presidents were personally (though not politically) popular with the vast majority of Americans. Yet there are important differences between President Obama and President Reagan...differences that I believe explain the dismal recovery of today compared to the remarkable recovery of the '80s.
1. President Reagan embraced his political opponents, like Tip O'Neal and Ted Kennedy while President Obama doesn't even embrace leaders of his own party like Nancy Pelosi and Harry Reid. President Reagan routinely invited democrat leaders to the White House for both formal and informal events, eventually wearing down their hostility and making it virtually impossible for them not to compromise with him. There's a national meme that the Republicans are the party of no and have refused to compromise with President Obama, as if this was the first time in American politics the minority party didn't roll-over for the majority. President Reagan initially had to deal with the exact same dynamic and he did, by killing them with kindness. When was the last time President Obama invited John Boehner, Mitch McConnel or Eric Cantor to the WH for anything other than a public scolding? One can debate whether each of these individual's behavior is adult like or not, but in the end, we only have one President, and he (she someday) has to provide leadership.
2. When democrats blocked key economic initiatives, President Reagan simply went around them and addressed the nation directly on prime-time TV. By doing so he both ensured the American citizens that things were going to get better (FDR's fireside chats) and gained their support by pressuring congress to pass his economic recovery plans. And it worked. In contrast, President Obama seldom speaks directly to the public and, when he does, he usually complains about the problems he inherited, misrepresents Republicans' positions in order to draw false dichotomies and comes across in condescending, professorial know-it-all manner. This infrequent, antagonistic approach has proven ineffective in rallying any meaningful pressure on congress to compromise with him. Though personally popular, his policies remain unpopular. Some may argue that's because Fox News, Rush Limbaugh, Sean Hannity and others misrepresent President Obama's positions, and there are ample examples of that happening. But does anybody believe the New York Times, CNN, CBS or NBC were fair and balanced in their reporting on President Reagan's policies? The only way the "far right media" excuse works is if you believe guys like Michael Savage are more persuasive than the President of the United States - a role we used to refer to as the "most powerful man in the world".
Policy differences aside, President Obama has failed to offer the leadership and inspiration needed to drive compromise or instill consumer confidence. And until the consumer perceives government is competently working to address our economic malaise, they won't participate in the recovery. And complaining about how great the Great Recession is...and using it's duration as proof...isn't going to instill confidence in President Obama's leadership nor economic policies.
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