In an article published by Forbes this past Friday, business news contributer Adam Hartung made a pretty bold claim.
Hartung said that President Obama has outperformed former President Ronald Reagan (who is widely considered by conservatives as the best economic president ever), “on jobs, growth and investing”.
To support his jobs claim, he used this graph, which compares the unemployment rate in the first 67 months of Obama’s and Reagan’s respective presidencies:
Both Reagan and Obama inherited difficult economic situations. Reagan had to deal with the oil-induced recession of the 1980s, while Obama had to deal with the The Great Recession that started with the crash of the U.S. housing market in 2008.
Hartung used the graph above to argue that Obama has had, “the best private sector jobs creation performance in American history”.
But, as many conservatives often point out, the unemployment rate we use most often (the U3) doesn’t count “discouraged workers” (people who have stopped looking for work altogether) as part of the workforce. The U6 rate includes everyone of working age, even those people who have stopped looking for employment.
In his research for the piece, Hurting reached out to Bob Deitrick, CEO of Polaris Financial Partners, quoting him heavily in the article.
When addressing the issue of the real (U6) unemployment, Hartung quoted Deitrick:
“…the difference between reported unemployment and all unemployment – including those on the fringe of the workforce – has remained pretty constant since 1994.”
Deitrick basically blamed the workforce issue on the changing demographics in America:
“Now that ‘Boomers’ are retiring we are seeing the percentage of those seeking employment decline. This has nothing to do with job availability, and everything to do with a highly predictable aging demographic.”
The “baby-boomer” generation is anyone born between 1946 and 1964. Most of the baby-boomers began hitting adulthood in the 70s, adding a significant number of workers to the available labor force during Reagan’s presidency from 1981-1989.
Deitrick cited that The labor participation rate is the percentage of people of working age (16-64) that are employed or are looking for employment.
When it comes to the stock market, Hartung’s claims were a little more accurate.
If you had invested a dollar at the beginning of Reagan’s presidency, it would have been worth $1.90 after his first 67 months (190% yield on investment).
A dollar invested on the first day of Obama’s presidency would have been worth $2.20 after his first 67 months (220% yield on investment):
However, when it comes to his claim about overall growth, the numbers contradict Hartung’s article once again.
Based on statistics from the World Bank, Reagan did considerably better in his first 67 months than Obama when it comes to annual GDP growth.
In his first five years as President, Obama has had an average GDP growth of 1.24% annually. Reagan’s first five years saw an average growth rate of 3.36%.
But many people argue that the economy Obama inherited was worse than the one Reagan inherited. Indeed, the 2008 recession was a bit more drastic than the recession that Reagan had to deal with.
This is due in large part to the fact that the 2008 recession was a global recession, with many of the U.S.’s biggest trading partners also suffering the consequences of the sub-prime mortgage crisis that destroyed the American housing market.
The American economy is an extremely complex system. While we can definitely look at a number of different indicators to try and understand certain parts of the economy, any analysis that attempts to explain the entire economy with only a few metrics is usually misleading.
Directly comparing our economy under Obama to the Reagan economy of the 1980s implies that the socioeconomic environment today is the same as it was 30 years ago, which is obviously a ridiculous supposition to make.
So instead of making comparisons to the past, we should all be trying to get a better understanding of our current economy. Maybe then we’ll be a bit more willing to compromise with one another about where to go from here.
Damon K. Jones
Damon K. Jones is an Activist, Author, and Publisher of Black Westchester Magazine, a Black-owned and operated newspaper based in Westchester County, New York.
Mr. Jones is a Spiritual Life Coach, Couples and Family Therapy Coach, Holistic Health Practitioner, First Aid in Mental Health Practioner, Diet and Nutrition Advisor, and Vegan, Vegetarian Nutrition Life Coach.
Mr. Jones is a 32-year Law Enforcement Practioner New York Representative of Blacks in Law Enforcement of America.
Mr. Jones has been a guest commentator on New York radio stations WBLS (107.5 FM), WLIB (1190 am), WRKS (98.7 FM), WBAI (99.5 FM), and Westchester's WVOX (1460 am). Mr. Jones has appeared on local television broadcasts, including Westchester News 12 "News Makers" and Public Television "Winbrook Pride. You can now hear Damon every Wednesday at 830 AM on WFAS at 1230 AM, Morning with Bob Marone Show.