The Economy?

To my astonishment, one of the factors given for the Democratic losses in the November 3rd election of Republicans to the governorships of Virginia and New Jersey was the poor state of the economy. In surveys taken at polling places, 85 percent of voters in Virginia and 89 percent of voters in New Jersey said that they were worried about the economy. Apparently the high rate of unemployment is being blamed by some on President Obama, who has been in office for 10 months. It seems that people, egged-on by Republican leaders, blame the incumbents in office for the state of the economy even if it is not their fault. Moreover, Republican spin-doctors have tried to make the governors races a referendum, in part, on President Obama’s handling of the economy.

Let’s get a few things straight. President Obama inherited a disastrous recession from George W. Bush and the Republicans. The recession was largely the result of the Republican repeal of laws and regulations that would have prevented much of the predatory lending and Wall Street manipulation of derivatives that led to a national financial meltdown. The recession began in December, 2007, and by the time Obama was inaugurated in January, 2009, it was in full-swing. At its low point, the Dow Jones Industrial Average closed at 6347. As of November 6, 2009, it stood at over 10,000. In January, 2009, the Gross Domestic Product (GDP) was down -6.2 percent. As of September, 2009, it was up +3.6 percent. That’s a 9.8 percent improvement in the GDP in just 9 months.

When President Obama took-over the government, America’s major banks and financial institutions were on the verge of total collapse. Such a collapse would have plunged this nation into depression and chaos. Over the objections of congressional Republicans, the President and his economic team were able to rescue the financial segment of our economy with TARP and other funds and were able to stem the tide of economic disaster with a major stimulus bill.

Those who accuse the Obama Administration of doing nothing should stop and think. All they have done to date is save this country from utter financial devastation. If you think we have high unemployment now, imagine what it would be like in a real depression. During the great depression of the 1930’s it was as much as 25 percent.

As of October, 2009, the stimulus had created or saved over 640,000 jobs. The U.S. manufacturing sector grew in August for the first time in 19 months. It continued to grow in September and October. According The Institute for Supply Management in its monthly Report on Business, the US manufacturing industry is hiring more aggressively than at any time since 2006. The Institute’s index for employment increased by 6.9 percentage points in October, 2009.

On November 2, 2009, The National Association of Realtors said pending home sales rose again, marking eight consecutive monthly gains – the longest streak since measurement began in 2001.

October, 2009, was far and away the best month American retailers have had since consumers put the brakes on spending last autumn. Major categories had robust sales growth for the first time in more than a year. In October, 2009, apparel sales increased 3.4 percent compared with the same period a year ago, luxury goods rose 6.5 percent, and jewelry increased 7.2 percent.

Despite the fact that there is still high unemployment, most leading economists have declared the recession to be over. It will take time to get back the jobs that were lost during the Bush recession, but they will come back—perhaps slowly. The absence of a genuine depression and the continued improvement in the economy is thanks to the steps taken by the Obama Administration and opposed by the Republicans.