Obama Inherited a Post-Recession Economy: Yes, You Read That Right

For years now, and especially recently, we’ve been awash in rhetoric that claims that President Barack Obama inherited a recession and that without spending $831,000,000,000 in stimulus money we don’t have, the United States would enter into a depression.  

The president’s door-to-door acolytes continue to hose the unlucky occupant with claims that the president couldn’t do in four years what it took FDR 12 to accomplish.  The premise of this hogwash implies that the two economic conditions are comparable. They’re not. FDR was dealing with an actual depression (and protracting it, in my view, see Robert Higgs’ “Depression, War, and Cold War” for more information), and this president was not.

Well the acolytes can keep blasting the firehose of mistaken rhetoric, but those who decide to shelter themselves from this falsehood can do so.  President Obama inherited an economy coming out of a recession.  

“A recession is a period of two quarters of negative GDP growth,” and, “According to the U.S. National Bureau of Economic Research (the official arbiter of U.S. recessions) the recession began in December 2007 and ended in June 2009.“  

The recession started in 2007.  The worst of it, as illustrated above by the The Bureau of Economic Analysis of the U.S. Department of Commerce (BEA), occurred in the fourth quarter of 2008 before Obama was sworn into office. The BEA shows the largest GDP contraction occurred in the fourth quarter of 2008, contracting the GDP by 8.9 percent. In the following quarter, the contraction was less severe: 6.7 percent. It also states that, “For the period of expansion from 2009:Q2 to 2011:Q1, real GDP increased at an average annual rate of 2.6 percent;” Once the GDP expansion begins, the recession is over.  The recession officially concluded in June 2009.

“The stimulus helped,” spits the acolyte. Really? Let’s wipe this spittle away.

A few days after the recession officially ended on “July 3, $60.4 billion in stimulus money had been spent... If you divide this by the full stimulus amount of $787 billion, you get 7.7 percent”. That’s 7.7 percent, using the original stimulus number, not the revised number I used above. Using the revised number, the percentage would be much lower.  These people expect us to simply gulp down the absurdity they’re serving. If we were to do so, we would need to believe that if 7.7 percent of the hundreds of billions of dollars spent on the stimulus got us out of the recession, imagine what spending the full 100 percent of the stimulus would do. My goodness, we’d be swimming in near full employment, the economy would be slathered with activity, and Obama would be sailing to re-election on his record. Well, we all know that’s not the case, and the stimulus money is long gone.

This President red-inked $6,000,000,000,000 in new debt and four years of deficits over a $1,000,000,000,000. He has presided over an economy teetering on a new recession and gas prices more than doubling which is driving the prices of all goods higher. He claims the economy he inherited was worse than he thought.  But the fact is, it was better than we’ve been lead to believe, and the economic stagnation we’re in is a result of his policies.  It’s time to wash away the last four years and start fresh.