US economy under Obama
(The Obama White House CEA archive should be available here in the future if links 5-9 will not work in the future)
It is a truism among economists that Presidents get too much blame when the economy is doing badly and too much credit when it is doing well. Factors outside the White House’s control, such as global and financial shocks, Federal Reserve policy, and demographic and technological trends, often play a big role in determining things like the level of unemployment and the growth rate of the gross domestic product.
But Presidents aren’t mere bystanders. The policies they carry out, in conjunction with Congress, matter a great deal. In times of acute danger, Presidents can give the economy a much-needed boost. Or they can prolong the agony. In the longer term, policies such as new spending programs, changes to the tax laws, and reforms of the regulatory code can have a major effect. Anybody who doubts this needs to read up on the legacy of Franklin Roosevelt or of Ronald Reagan.
Obama’s policies helped lift the economy out of a frightening slump and set it on a path to steady, if unspectacular, growth. In fact, I’d call this his biggest achievement. The scale of the financial panic of 2008 and the extent of the job losses that occurred in the first months of 2009 should never be forgotten. ...
... At seven and a half years long, the Obama recovery now is one of the longest on record. In terms of annual G.D.P. growth, the rate of expansion has been relatively modest: since 2010, G.D.P. has risen by about 2.1 per cent a year.
US economic outcomes have become exceptionally unequal, despite a modestly progressive shift in the impact of fiscal policy under Mr Obama. Doing something effective about this was beyond his powers, both because it is difficult and because his opponents had no interest in helping.
Second, the participation in the labour force of prime-aged males (25 to 54) has been on a 70-year downward trend, while that of prime-aged females has flatlined for three decades. This is a poor performance by the standards of most high-income economies. It is impossible to argue credibly that this is the result of particularly generous US welfare benefits or particularly high minimum wages. The failure is deeper.
Third, growth of labour productivity has slowed sharply, though it was still higher than in other members of the Group of Seven leading high-income countries between 2005 and 2015. The reasons for this slowdown are a puzzle. Possibilities include the post-crisis weakening of business investment and a broader post-crisis loss of animal spirits. It is also likely that the underlying rate of innovation is slowing.
... [Furman:] Seriously, the most interesting questions and the hardest questions are not what is the best policy. That can be hard, and we do not always know the answer, but in a lot of cases, like the competition point above, we really do have a pretty good idea of what we should do.
Instead, the hardest question is often how to get something close to the best policy done, whether by building a broader coalition to support it, describing it better, packaging it with other measures, or making compromises.