White House

Obama on the Economy 5 Years Later: ‘We’re Not Near Where We Need to Be’

Five years after the collapse of Lehman Brothers and the coming-out party for the Great Recession, the president says there’s more he can do.

President Obama during his meeting with Kuwait Amir Sheik Sabah Al Ahmed Al Sabah in the Oval Office of the White House in Washington, Friday, Sept. 13, 2013. 
National Journal
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Matt Berman
Sept. 15, 2013, 6:45 a.m.

Pres­id­ent Obama launched a de­fense of the eco­nom­ic pro­gress un­der his ad­min­is­tra­tion Sunday on ABC’s This Week with George Stephan­o­poulos, while still ac­know­ledging how much there is left to be done. Obama’s in­ter­view comes five years after the col­lapse of Leh­man Broth­ers kicked off the fin­an­cial crisis at the heart of the 2007-09 re­ces­sion. That re­ces­sion, Obama said Sunday, was in some ways “worse than what happened in the 1930s.”

But, pre­view­ing a Monday Rose Garden speech, Obama ran off a string of ac­com­plish­ments:

We came in, sta­bil­ized the situ­ation. We’ve now had 42 straight months of growth. Sev­en and a half mil­lion new jobs cre­ated. Five hun­dred thou­sand jobs in man­u­fac­tur­ing, 370,000 jobs in an auto in­dustry that had com­pletely col­lapsed. The bank­ing sys­tem works, it is giv­ing loans to com­pan­ies who can get cred­it. And so we have seen, I think, un­doubtedly pro­gress across the board.

“But what is also true,” the pres­id­ent said, “is that we’re not near where we need to be.” The pres­id­ent poin­ted to long-term trends in the U.S. eco­nomy, where in­equal­ity has bal­looned since 1979. Say­ing that he’s cap­able of stop­ing those trends, Obama called out a por­tion of Con­gress “whose policies don’t just wanna leave things alone, they ac­tu­ally want to ac­cel­er­ate these trends.”

Sunday isn’t just the an­niversary of Leh­man col­lapsing and the eco­nom­ic tur­moil shift­ing in­to warp speed. It’s also five years to the day after then-Re­pub­lic­an pres­id­en­tial can­did­ate John Mc­Cain said that “the fun­da­ment­als of our eco­nomy are strong.”

Can­did­ate Obama, for his part, chided the Bush ad­min­is­tra­tion on Sept. 15, 2008, for policies that “shred­ded con­sumer pro­tec­tions” and “loosened over­sight and reg­u­la­tion and en­cour­aged out­sized bo­nuses to CEOs,” set­ting up what would be­come his pres­id­en­tial push for fin­an­cial re­form. “The res­ult,” he said then, “is the most ser­i­ous fin­an­cial crisis since the Great De­pres­sion.”

Mc­Cain was ob­vi­ously wrong about the eco­nomy then, and five years later, there’s no one who would dare re­peat the claim now.

It may be something of a tru­ism, but one of the most in­cred­ible things about the 2007-09 re­ces­sion is just how much of a slough the re­cov­ery has been. Take this newly up­dated chart from the Cen­ter on Budget and Policy Pri­or­it­ies, com­par­ing the re­cov­er­ies from the four most re­cent re­ces­sions:

The un­em­ploy­ment rate in Septem­ber 2008 was 6.1 per­cent — up from a re­l­at­ively stable 5 per­cent that had been the peak un­em­ploy­ment for the 30 months pre­ced­ing Decem­ber 2007. The un­em­ploy­ment rate stead­ily rose throughout 2008 and the be­gin­ning of 2009, spik­ing at 10.2 per­cent in Oc­to­ber 2009.

We still haven’t got­ten back to the prere­ces­sion levels of un­em­ploy­ment. We haven’t even got­ten back to the mid-re­ces­sion un­em­ploy­ment of five years ago. The em­ploy­ment pic­ture for this Au­gust was par­tic­u­larly bleak, with an Obama-pres­id­ency-low un­em­ploy­ment rate of 7.3 per­cent mask­ing sharp down­ward re­vi­sions to the pre­vi­ous months’ jobs gains. At Au­gust’s rate of job growth, it’d take nearly two years for the eco­nomy to get back to 5 per­cent un­em­ploy­ment.

One of the darkest sides of the re­ces­sion has been the slow re­cov­ery of the long-term un­em­ployed — people who have been out of work for at least 27 weeks. As the CBPP shows, the rates of long-term-un­em­ployed Amer­ic­ans are still un­pre­ced­en­ted:

Last month, the long-term un­em­ployed ac­coun­ted for 37.9 per­cent of the total un­em­ployed, about un­changed from the month be­fore. Over the last year, the num­ber of long-term-un­em­ployed Amer­ic­ans has dropped by 733,000 to 4.3 mil­lion people in Au­gust.

Obama is ob­vi­ously right to say the eco­nomy today isn’t as bad as it was five years ago. Many people have come back from the re­ces­sion’s depths. Even former Leh­man CEO Dick Fuld is sort-of back, push­ing a chem­ic­al-re­cyc­ling penny stock. But the truth is, five years after the col­lapse of Leh­man Broth­ers, the re­cov­ery from the Great Re­ces­sion has been any­thing but equal.


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