Legal Commentary

Morning In Obama's America

By Big Tent Democrat

Bob Shrum:

Morning in Obama's America The president sounds like Reagan. His opponents have a bad case of malaise

State of the Union addresses are often a wash; the one Obama delivered this week was a watershed. The evening produced two visions, one hopeful, the other infused with fear; one delivered from high ground, the other emerging from a low bog of grievance, gloom, and doom. The events of the coming months and the direction of the 2012 campaign will be shaped by the terrain that each camp has claimed.

The American people get it. The Republicans don't. In their downbeat responses, the official one and the Tea Party artifact, Representative Paul Ryan and his Palindrone colleague Michele Bachmann in effect renounced Reagan's optimism and darkly warned that the country's best days may be behind us.

Does current reality intrude on this perception? Today, the Commerce Department announced that the economy grew at an annualized rate of 3.2% in the 4th quarter of 2010:

The United States economy sped up its growth rate in the fourth quarter, though slightly less than expected, chiefly on the backs of revitalized consumers and a narrowed trade deficit.

Gross domestic product, a broad measure of all the goods and services produced by the economy, grew at an annual rate of 3.2 percent in the fourth quarter, up from 2.6 percent in the previous period, according to the Commerce Department.

In 1983, after 2 years of deep recession, the GDP grew by nearly 8%. By November 1984, the jobless rate fell from 10.8% in December 1982, to 7.4%. Consider this:

Earlier this week, the Congressional Budget Office forecast that the economy would grow 3.1 percent in 2011, a figure echoed by many Wall Street economists. While that growth rate would be faster than last year’s, it is still likely not robust enough to make a significant dent in the unemployment rate, which stood at 9.4 percent in December. In the couple of years before the Great Recession, which began in December 2007, the American jobless rate was less than half that.

“We’re still very much below the output growth rate needed to absorb the slack in labor market,” said Prajakta Bhide, a research analyst for the United States economy at Roubini Global Economics. “We’re expecting to end the year with an unemployment rate of 9 percent.”

Also consider this story from last year, January 2010:

The U.S. economy grew at a breakneck rate of 5.7 percent at the end of 2009, the government said Friday, providing the strongest evidence yet that the nation will avoid a dip back into recession. The growth spurt in gross domestic product, the broadest measure of economic activity, was the largest in six years.

[. . .] "We can now say that this is a sustainable recovery," said John Silvia, chief economist at Wells Fargo. "It's certainly not a boom, but it is a slow, steady recovery."

[. . .] The big question now is how long it will take the growth in output, which began over the summer, to lead to significant job creation. Forecasters are expecting job growth to begin this spring, perhaps by February or March. The employment numbers early in the year will get a boost from temporary hiring for the once-a-decade census.

I assume you all remember Recovery Summer. In the end, the "Morning in Obama's America" theme is dependent on Republicans being right about the efficacy of tax cuts for spurring economic growth in this zero bound economy:

The payroll tax cut and the extension of the Bush tax cuts that were passed in December are expected to further buoy consumer spending in 2011.

Morning in Obama's America is dependent on Reaganomics in the end.

Speaking for me only

Full post as published by TalkLeft on January 28, 2011 (boomark / email).

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