Economy

Obama’s economy

Will Trump rev the engine, or
drive it into a ditch?

Obama is handing a healthy economy to Trump

Obamanomics: VICE Money looks back at the Obama economy.
VICE Money looks back at the Obama economy.

Obama is handing over the keys to the U.S. economy — the world’s largest and most important — with the engine running smoothly.

In the months preceding the political earthquake that was the U.S. presidential election, the U.S. economy was expanding at a pretty solid clip. The U.S. Bureau of Economic Analysis reported that American economic activity expanded at an annual rate of 3.2 percent in the three months that ended in September, the fastest pace in two years. In other words, President Barack Obama will handing an economic in relatively decent shape to Donald J. Trump.

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As the Obama era comes to a close, VICE Money is taking a retrospective look at his economic legacy. The eight years of the Obama administration amounts to a large economic contradiction. Obama’s presidency spanned some of the most volatile economic conditions since the Great Depression, brought on by the financial crisis and the Great Recession that struck just before Obama took over the White House in January 2009.

And by some measures, Obama has overseen an impressive economic recovery. The U.S. unemployment rate hit a high of 10 percent in October 2009 but has since fallen sharply and currently stands at 4.9 percent. Obama’s stint in the White House has coincided with the longest consecutive stretch of job growth on record, 73 straight months. More recently, economic benefits even seem to be trickling down to workers. Poverty fell sharply in 2015, coinciding with the largest jump in incomes on record for a typical household.

Still, while Obama’s overall approval rating is a relatively high 54 percent, his approval on the economy is lower, 49 percent, according to averages of polls compiled by Real Clear Politics. Part of that could be a pervasive sense of sluggishness about the economy. That sense is supported by lackluster growth in U.S. GDP since Obama has been in office, compared to the era before the Great Recession.

Between 2000 and 2007, the U.S. economy expanded at an average rate 2.5 percent per quarter. But between since Obama took office in the first quarter 2009 — when the economy was contracting at a rate of 5.4 percent — the economy has expanded at a slower 1.8 percent annual rate. (Note: If you don’t count the first two quarters of his administration, when the Great Recession was raging, growth averages 2.1 percent.)

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There are many ways to argue about these economic facts. Growth isn’t everything. And fast GDP growth through excessive levels of debt — see the housing bubble under George W. Bush — can end in disaster. We can argue whether presidents should get either the credit or the blame for economic performance — but presidents always do.

So, when President Trump is in the driver’s seat of a reasonably well-cared-for U.S. economy, he’ll stand to get the glory for revving the engine, or the grief for driving it into a ditch.

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