Did Obama save U.S. from a depression? Not so much
My old boss John Merline of Investor’s Business Daily eviscerates President Obama’s recent claim that back in 2009 “we had to hit the ground running and do everything we could to prevent a second Great Depression.”
White House economists forecast in January 2009 that, even without a stimulus, unemployment would top out at just 8.8% — well below the 10.8% peak during the 1981-82 recession, and nowhere near Depression-era unemployment levels.
The same month, the Congressional Budget Office predicted that, absent any stimulus, the recession would end in “the second half of 2009.” The recession officially ended in June 2009, suggesting that the stimulus did not have anything to do with it.
The data weren’t showing it, either.
The argument is often made that the recession turned out to be far worse than anyone knew at the time. But various indicators show that the economy had pretty much hit bottom at the end of 2008 — a month before President Obama took office.
Monthly GDP, for example, stopped free-falling in December 2008, long before the stimulus kicked in, according to the National Bureau of Economic Research. (See nearby chart.) Monthly job losses bottomed out in early 2009 while the Index of Leading Economic Indicators started to rise in April.
The stimulus timing is off.
When the recession officially ended in June 2009, just 15% of the stimulus money had gone out the door. And that figure’s likely inflated, since almost a third of the money was in the form of grants to states, which some studies suggest they didn’t spend, but used to pay down debt.
It’s an interesting strategy. Since the White House can’t sell whatever this is as any sort of recovery, they are trying to buy time with voters by inflating the risks the U.S. economy faced when Obama took office. Of course, there is a rival meme: He made it worse.