Mitt Romney routinely asks voters whether they’re better off than they were four years ago. He’d be better off asking another question: What has the president done for you lately?
At this point in 2008, amid the worst financial panic since 1929, the U.S. economy was melting down, contracting 8.9 percent in the fourth quarter of that year. Today, by most measures, the economy is in far better shape. Of 70 indicators compiled by Bloomberg, 51 -- including growth, hiring, housing starts and the stock market -- have improved from January 2009 when President Barack Obama took office.
“The economy was going off a cliff,” says Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who has been tracking the economy since 1983. “Since then, we’ve been digging our way out of the well.”
In recent months, though, the digging has gotten tougher. The economy has been growing below its historical trend for five consecutive months and nine of the past 12, according to the three-month moving average of the Chicago Federal Reserve Bank’s National Activity Index, a blend of 85 indicators measuring employment, production, housing and consumption.
The economy’s tepid rebound, with growth averaging just 2 percent annually since the end of the recession in June 2009, has lost even more momentum in the past two quarters. Third- quarter growth is expected to reach 1.8 percent, little changed from the 1.7 percent annual pace in the second quarter, according to the median forecast of economists surveyed by Bloomberg.
Voicing “grave concern” about chronic high unemployment, U.S. Federal Reserve Chairman Ben S. Bernanke announced on Sept. 13 open-ended purchases of mortgage debt designed to spark faster growth. The Fed now anticipates keeping interest rates near zero until 2015.
At the same time, fewer indicators in Bloomberg’s unweighted analysis have improved since the end of 2011. Of the 70 items, 46 have brightened, down from 51 with positive readings over the four-year period. Among the metrics that have declined: corporate profits, the degree of optimism reported by small business owners and chain-store sales.
Unemployment has been above 8 percent for 43 straight months, the longest stretch in monthly records going back to 1948. Median household income is back to its 1995 level and has fallen more during the Obama recovery than during the recession that preceded it, according to Sentier Research of Annapolis, Maryland.
Even the recession’s end has had a muted impact on voters’ pocketbooks. In August, average hourly earnings for private industry workers rose 1.3 percent over the same month the previous year, compared with a 3.8 percent gain recorded in January 2009 over the year-earlier period.
“This is a lot harder slog than we’re used to as a country,” said Drew Matus, senior U.S. economist with UBS Securities LLC. “People are feeling more pressure. If they manage to keep their job, they’re more nervous than they used to be.”
Including part-time workers who would prefer full-time jobs, 14.7 percent of the labor force is jobless or underemployed, little changed from March’s 14.5 percent figure, according to the Bureau of Labor Statistics.
On the stump, Romney’s running mate, Paul Ryan, a Wisconsin congressman, says Obama inherited a bad economy and “made it worse.”
Voters aren’t convinced. In a CNN/ORC poll released Sept. 13, 57 percent of respondents said the policies of former President George W. Bush were mostly to blame for the economy’s current condition, compared with 35 percent faulting Obama.
The percentage of voters saying the country is better off now than four years ago has risen in the past month, a period covering the national political conventions, according to an NBC/Wall Street Journal poll released yesterday.
Thirty-eight percent of registered voters answered “better off,” up from 31 percent in the August survey, and 21 percent found no change. A 41 percent plurality said the U.S. was worse off, little changed from last month’s 42 percent, according to the September 12-16 poll.
The “are you better off” question has been a staple of presidential challengers since Oct. 28, 1980, when Ronald Reagan used it against President Jimmy Carter. One week after concluding the debate with that query, Reagan won the presidency, taking 44 states and 489 electoral votes.
In September 1980, however, the economy was much weaker than it is today. The unofficial “misery index,” which combines the unemployment rate and the rise in consumer prices, opened in 1980 at 19.3 before rising to 20.6 by Labor Day. This year’s misery index has been lower and falling, from 12 as 2012 began to 9.8 today.
“There’s a nostalgia for the 1980 Reagan moment in the Republican Party that is hurting them,” said Simon Rosenberg, president of NDN, a Democratic-leaning research group. “Obama is not Jimmy Carter. Mitt Romney is not Ronald Reagan. And the 2012 economy is not the 1980 economy.”
For Obama, the “better off” comparison gets easier between now and Election Day by one significant measure. In 2008, the Standard & Poor’s 500 Index (SPX) fell steadily from the beginning of September through Nov. 6, the date of this year’s balloting. The 29 percent decline accelerated in late September following the Lehman Brothers bankruptcy filing. This year the S&P 500 had risen 3.9 percent as of yesterday since the start of September trading, part of a 16 percent year-to-date gain.
Likewise, the labor market was deteriorating in the fall of 2008 -- shedding 432,000 jobs in September, 489,000 in October and 803,000 in November. It doesn’t take much to outperform that track record; the 139,000 new jobs the economy has averaged every month this year will suffice.
Since their national convention in Tampa, Florida, last month, Republicans have been targeting Obama’s handling of the federal debt, which has risen to more than $16 trillion from $10.6 trillion on the day he was sworn into office. Yesterday, the Romney campaign released a new web video warning of a “prairie fire of debt sweeping across our nation.”
Investors have yet to embrace the Republicans’ debt concern. The yield on the 10-year Treasury note, 1.81 percent as of yesterday in New York, is lower than the 2.38 percent investors demanded when Obama took office.
Most of the increase in the government’s annual budget deficits following the financial crisis stemmed from economic weakness rather than new spending, according to a Bloomberg Government study released in August.
The study found that 61 percent of the increase in the deficit in fiscal 2009 through 2011 was caused by falling individual and corporate income tax receipts and automatic spending increases, such as on unemployment compensation. That compared with 24 percent attributed to the stimulus program and an additional 15 percent linked to non-stimulus spending growth on programs including the military.
As the government has borrowed more to support the economy, consumers have gradually whittled down their debt load. Household debt of $13.7 trillion was equal to 97 percent of gross domestic product at the end of 2008. Today’s $12.9 trillion equals 83 percent of total output.
That “deleveraging” may be buoying public sentiment. Consumers are more upbeat today compared with four years ago, according to the University of Michigan Survey of Consumer Confidence, which hit a reading of 79.2 in September compared with 70.3 in September 2008.
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