It was another fairly strong report: a hundred and fifty-six thousand jobs were created in December, the unemployment rate was 4.7 per cent, and average hourly wages were almost three per cent higher than they had been a year earlier. As the President’s supporters were quick to point out, this was the seventy-fifth consecutive month of job growth, which is a record for the modern era. Since early 2010, 15.8 million jobs have been created.
How much credit does Obama deserve for all this? It is a truism among economists that Presidents get too much blame when the economy is doing badly and too much credit when it is doing well. Factors outside the White House’s control, such as global and financial shocks, Federal Reserve policy, and demographic and technological trends, often play a big role in determining things like the level of unemployment and the growth rate of the gross domestic product.
But Presidents aren’t mere bystanders. The policies they carry out, in conjunction with Congress, matter a great deal. In times of acute danger, Presidents can give the economy a much-needed boost. Or they can prolong the agony. In the longer term, policies such as new spending programs, changes to the tax laws, and reforms of the regulatory code can have a major effect. Anybody who doubts this needs to read up on the legacy of Franklin Roosevelt or of Ronald Reagan.
Obama’s policies helped lift the economy out of a frightening slump and set it on a path to steady, if unspectacular, growth. In fact, I’d call this his biggest achievement. The scale of the financial panic of 2008 and the extent of the job losses that occurred in the first months of 2009 should never be forgotten. By “a number of macroeconomic measures—including household wealth, employment and trade flows—the first year of the Great Recession in the United States saw declines that were as large or larger than at the outset of the Great Depression in 1929-30,” Jason Furman, the chairman of the White House Council of Economic Advisers, recounted in an exit memo that he posted online this week.