Obama's economy is driving well, considering the hand brake is on
Smart choices by President Obama and Congress have saved the economy from another recession and put it on the path to recovery. Policymakers can continue to help the economy by removing the obstacles to faster growth, such as helping struggling states retain teachers.
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The results are in the numbers. Manufacturing production expanded by an annualized growth rate of 5.6 percent from June 2009 to June 2012, recovering many of the losses before the Great Recession started in December 2007.Skip to next paragraph
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Construction spending by federal, state, and local governments on highways, schools, railroads, hospitals, and other projects expanded by an annual inflation-adjusted rate of 3 percent over the same time period, thus offsetting the declines in private-sector construction spending.
And after-tax income grew by an annual inflation-adjusted rate of 1.2 percent from June 2009 to June 2012, helping to reduce the household debt burden.
Stronger production, more infrastructure spending, and higher incomes had other intended results. Employment started to grow in February 2010, and now there are now more than 3 million more jobs than in June 2009. The unemployment rate started to drop, falling below 8 percent for the first time in almost four years. And the manufacturing resurgence went along with increased US competitiveness, reflected in an average annual export growth rate of about 8 percent over three years. The economy has performed like a car with the parking brake still pulled. The surprising thing is not that the economy hasn’t grown faster, but that it hasn’t gone into another recession.
That is not to say that we shouldn’t expect the economy to perform better, to grow faster, and to add more jobs each month than it has. Quite the contrary, one lesson is that policymakers can help the economy by removing obstacles to faster growth, such as helping struggling states retain teachers.
The second lesson is that policymakers have already shown that they know how to remove such obstacles. Past policy interventions, starting with the recovery act in 2009 and a series of smaller infrastructure measures and middle-class tax cuts, not only prevented another Great Depression in 2009, they also kept the economy away from another recession in the subsequent years. The resilient recovery of the past three years reflects the inherent success of such targeted policies.