For years now, and especially recently, we’ve been awash in rhetoric that claims that President 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 that answers the knock with claims that the president couldn’t do in 4 years what it took FDR 12 to accomplish. The premise of this hogwash implies that the two 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 firehouse of mistaken rhetoric, but anyone that decides 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, occurred in the 4th quarter of 2008 before President Obama was sworn into office. The BEA shows the largest of GDP contraction occurred in the 4th quarter of 2008, contracting GDP by -8.9 percent. The following quarter the contractions were 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% 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 me to simply gulp down the absurdity they’re serving. If I were to do so, I would need believe that if 7.7% of the hundreds of billions of dollars spent on the stimulus got us out of the recession, imagine what spending the full 100% the stimulus would do. My goodness we’d be swimming in near full employment, the economy would be slathered with activity, and President Obama would be sailing to reelection on his record. Well, we all know that’s not the case, and the stimulus money is long gone. It’s time to dry off, close the door on the last 4 years, and start fresh.