You’d never know it by listening to AM talk radio or watching cable news or even reading social media, but based on leading economic indicators, President Obama’s record on the economy is actually much stronger than Ronald Reagan’s record. Shocking, I know, but it’s true. There’s one factor, however, that’s preventing Obama from fully achieving this status, and we’ll talk about that momentarily.
Recently, Forbes‘ Adam Hartung published a report in which he consulted with Rob Deitrick, CEO of Polaris Financial Partners, regarding the comparative records of Obama and Reagan. In terms of employment, economic expansion and financial investments, the state of the economy has improved more rapidly and more robustly under Obama than it did under Reagan. Yet Reagan, in today’s political mythology, enjoys a status he doesn’t entirely deserve while Obama is regarded poorly in comparison.
1) Where Are The Jobs?
Let’s set the stage. The latest jobs report showed that job creation held steady above 200,000 new jobs per month for most of the year until August when the Bureau of Labor Statistics showed only 142,000 jobs created. Decent, but the streak was still broken. However, unemployment continued to fall, dropping to 6.1 percent, down from around 10 percent at its peak.
Contrast this with Reagan’s record at this stage of his presidency. Rob Deitrick pointed out to Forbes that Reagan’s unemployment numbers peaked higher (around 11 percent) than Obama’s high-water mark, and Obama’s 6.1 percent unemployment figure in his sixth year has bested Reagan by a full year. In Reagan’s sixth year, unemployment was still in the low sevens. Deitrick added that Polaris expects unemployment to drop to 5.4 percent by next Summer — nearly half what it was in 2010.
Now, Republicans might cite the recent decline in the labor participation rate (briefly, the number of people looking for work). Deitrick explained that while Reagan’s jobs numbers benefited from an active baby-boomer generation, Obama’s poor participation numbers can be explained by the massive influx of retiring baby-boomers. Deitrick:
What’s now clear is that the Obama administration policies have outperformed the Reagan administration policies for job creation and unemployment reduction. Even though Reagan had the benefit of a growing Boomer class to ignite economic growth, while Obama has been forced to deal with a retiring workforce developing special needs. During the eight years preceding Obama there was a net reduction in jobs in America. We now are rapidly moving toward higher, sustainable jobs growth.
2) The Obama Economic Expansion
We can’t really gripe about America “not making anything anymore.” For the longest time, we’ve watched as manufacturing jobs were moved overseas to exploit cheaper labor. But during the Obama administration, Forbes reported, there’s been 63 consecutive months of economic expansion, in addition to 25 months of increased manufacturing. This according to the Institute for Supply Managaement’s Purchasing Managers Index. And the numbers are growing — up two points in August to a score of 59. New orders for manufacturing have reached a level not seen since early 2004.
3) Wall Street
One of the myths that came out of the Occupy Wall Street movement was that regular people don’t benefit from a bull market and a prosperous Dow. This isn’t meant to excuse malfeasance and the unforgivably irresponsible behavior that helped precipitate the recession, but when the market does well, yes, regular people benefit from that. Their 401(k) pension plans flourish, their mutual funds grow and generally, yes, a rising tide lifts all boats depending on how many boats we have in the water.
During the Reagan years, if your investments would’ve increased by 190 percent. That’s a lot. Under Obama, however, the same dollar has yielded a 220 percent gain. That’s a lot more. If you own shares in the company you work for, you’re probably doing better. If you have a 401(k), you’re probably doing much better. If you have an IRA, you’re doing great. The Dow has reached record highs under Obama — over 17,000 — not too shabby for a guy whose economic policies were considered to be the arrival of European socialism, or worse.
4) The Deficit
Call me a blasphemer, but Reagan was comparatively terrible on government growth and spending, two areas where conservatism is supposed to rule. Reagan once declared, “Government is the problem,” and therefore vowed to reduce the size of government. He didn’t. The deficit doubled and the debt tripled. Under Obama, the deficit has declined by just under a trillion dollars. I repeat: the federal budget deficit has gone from $1.4 trillion when Obama took office to $500 billion at the end of this year. And while government employment increased under Reagan, literally expanding the size of government, it’s declined under Obama, much to the detriment of his overall employment numbers.
While we’re here, we should nip something in the bud. Yes, Congress “controls the purse strings,” and, no, “the president doesn’t create jobs.” But if you’re going to credit Reagan or Clinton or whomever with the deficit or economic growth, then you have to credit Obama for the same. Likewise, if you’re going to criticize Obama because you perceive a weak economy, then you have to give him credit when it’s strong. You can’t have it both ways. You can’t blame him for a bad economy, then suggest improvements are the result of actions by someone else. Well, I suppose you can do that, but you’re going to sound silly.
Also, chew on this. The Democratic House, and its speaker Tip O’Neill, passed all of the spending bills during the Reagan years. Who signed those spending bills into law, ballooning the deficit and debt? Obama?
5) One Thing Is Missing
Take a guess at why Reagan is generally better regarded on the economy than Obama. Messaging. Reagan, for all his flaws, was good at it, and the Obama administration can’t seem to get the word out about its strong record. Given the strength of the Obama economy, he should be riding high in terms of approval ratings, but overall and specifically on the economy, his numbers are incongruously low. Sure, times have changed. Washington is more cynical and ridiculously more divisive than it was 30 years ago. There wasn’t the internet, social media, 24-hour cable news or widely syndicated talk radio screechers. Perhaps this is one reason why, whenever the White House happens to be on-point with its messaging, it doesn’t really stick to the wall. But it’s difficult to overcome, even for the chief executive, the deafening noise machine with its confirmation bias and misinformation racing around the world before the truth gets its pants on. The Obama legacy is at stake now, and if he ever intends to leave office in 2017 with a strong record, he needs to improve his game. He surely has the oratory ability to do it, but maybe his communications staff isn’t up for the job.