On Oct 12, 2007, the Dow Jones Industrial Average stood at 14,093. On Jan 20, 2009, it had plummeted to 8279. Then Barack Obama became president. On March 6, it had further plummeted to 6627. Then it started rising. By July 17, 2009, it passed it’s Jan 20 value and reached 8724. It has not fallen further since then.
I bring this up because I have been reading articles from the past year or two comparing the Reagan recovery to the Obama recovery, and because in comments to an article on The Foundry called Morning Bell: A Disappointing Recovery Leaves Americans Suffering, one reader notes that Americans have lost thousands of dollars in their retirement plans due to President Obama’s economic policies. That’s a hard argument to make, since almost all losses in retirement plans occurred before Obama took office, and all losses have been regained since he did take office (assuming you can equate retirement plans with the Dow Jones). The reader also laments the loss in housing value due to the Obama administration’s economic policies. Home values reached a peak (JP’s Real Estate Charts) of $275,000 in 2006, then plummeted to just below $175,000 at the beginning of 2009, when President Obama took office, which is about where it was in mid-2011. Again, it’s a hard argument to make that the Obama administration’s economic policies since he took office in 2009 account for the plummet in home values in the 3 years before he took office.
Just a few more numbers comparing the Reagan recovery to the Obama recovery. In January, 1981, when President Reagan took office, the unemployment rate was 7.2%. It rose and fell until August, when it was also 7.2%. After August, 1981, the unemployment rate rose until it reached 10.8% in December of 1982. In July of 1984, three and a half years after Reagan took office, and three years after it had started climbing from 7.2%, it settled back down to 7.2%. When President Obama took office in January, 2009, the unemployment rate was 7.8% and rising. The unemployment rate peaked at 10% in October of 2009, and is now at 8.3%, three years later. You could call this advantage Reagan, except that all of the increase in unemployment on his watch was as the result of his (and to be fair, Paul Volker’s) policy, since it didn’t start rising until 6 months into his term; whereas unemployment was rising when Obama took office, so maybe he shouldn’t get blamed for the first few months it rose.
The Democrats would like to put a good face on the progress of the Obama recovery; Republicans would like to continue to lionize Reagan and imagine that were he president today, the recovery would be in full swing. Truth is, the two recessions, the Reagan Recession and the one Obama inherited, are too different for simplistic comparisons, and in many of the ways in which Americans really feel hit in their pocketbooks (see housing, above), the damage had been done before President Obama’s oath of office.