Obama's 8-Year Tenure And The Economy's Struggles To Stay Afloat
Shanthi Rexaline
Even as 2016 whimpered to a tame close from a Main Street perspective, there is no denying of the fact that under former President Barack Obama, the economy staged a fairly decent recovery from the Great Recession.
Data released earlier this year showed the economy expanding at a 1.9 percent clip in the fourth quarter, slowing down from the 3.5 percent growth in the third quarter. The annual GDP growth of 1.6 percent for 2016 represented the slowest since 2011.
Obama assumed office for the first time in January 2009, as the recession, which was the result of the bursting of the housing market bubble that rendered huge amounts of mortgage-backed securities worthless, was in its last leg. The recession began in late 2007 and lasted until June 2009. Thus, Obama was required to do a lot of firefighting in the first year of his first tenure.
This is how the economy fared in each of the eight years he was the president:
The year 2009 was characterized by large scale layoffs, bankruptcies and salary freezes, as the economy struggled with the recession. Once Obama was in office, he signed a $787 billion stimulus package. Several incentives such as cash for clunkers, an incentive for first-time home buyers, and tax breaks were also offered. Consequently, the economy slowly and steadily emerged out of the recession.
The economy continued to weather the downturn in 2010, thanks to a host of stimulus measures, including HIRE Act that sought to cut taxes, offer business credits and subsidies, and in the process, create jobs in the economy. The Dodd-Frank Wall Street Reform and Consumer Protection Act, which President Donald Trump is seeking to repeal, was enacted to curb the excesses of financial institutions. The Federal Reserve announced another round of quantitative easing.
The economic growth slowed in 2011. The Obama administration averted a government shutdown by raising the debt ceiling. In order to lower the stubbornly high unemployment, the American Jobs Act was passed. The Fed announced Operation Twist, through which the central bank tried to restructure its debt by selling short-term T-bills and buying long-term bills. The U.S. economy lost its AAA credit rating, as the S&P downgraded the rating on U.S. treasury debt to AA+ from AAA.
In 2012, economic growth quickened, with the stimulus measures announced in the past began to pay off. However, uncertainties surrounding the U.S. presidential election, fiscal cliff and the European debt crisis kept a lid on growth.
The year 2013 was marred by the impact of a 16-day federal government shutdown. The state of Detroit filed for bankruptcy. Though there was a slowdown in the jobless rate, job gains were anemic.
The year 2014 was credited with being the breakout year after the recession. Even as overseas economies were rocked due to different crises and harsh winter weather impacting the domestic economy during the early part of the year, the U.S. economy extricated itself creditably, thanks to a buzzing job market and an accommodative monetary policy stance.
The U.S. economy continued to reap the benefit of a salubrious job market in 2015. Wage growth picked up, boosting consumer confidence, and the housing market stayed buoyant.
After two years of 2+ percent growth, the economy stuttered, expanding a mere 1.6 percent in 2016. Commenting on the data, Allianz's Mohamed El-Erian said the soft Q4 number is a reminder of the structural headwinds still facing the economy.
