A Narrative Debunked
As the completely in-competent Obama Administration lumbers on, applying one losing solution to our pathetic economic growth after another, our failed-recovery can hardly continue to be beamed on President George W. Bush!
A Narrative Debunked
Growth: For years now, the Obama administration has excused the slowest economic recovery in history as a result of the deep financial crisis of 2008-09. Now a study from a surprising source casts serious doubt on that.
Typical is a remark President Obama made in 2012, when it was becoming clear that his “stimulus,” along with massive reregulation of the economy, subsidies to money-losing, Democrat-favored firms, and the Fed’s quantitative easing and zerointerest-rate policies, weren’t working as forecast.
“This was not your normal recession,” Obama told a group of workers that June. “Throughout history, it has typically taken countries up to 10 years to recover from financial crises of this magnitude.”
Obama’s excuse was picked up by supporters on the left and echoed by members of his own administration. It’s been part of the Democrats’ narrative ever since.
Obama seemed to find a strong supporter for his thesis in then-Fed Chairman Ben Bernanke, who in November 2012, in a speech to the Economic Club of New York, said that Fed research “has found that severe financial crises . . . have often been associated with many years of subsequent weak performance.”
Similarly, the IMF in 2012 asserted in its own study that “recessions associated with financial crises tend to be unusually severe and that recoveries from such recessions are typically slow.”
In short, don’t blame Obama or the Fed for the weak 2.2%-a-year growth the U.S. has posted since the financial crisis. No, blame the financial crisis, which, as we all know, was caused by Wall Street greed.
But now a new study finds “little support for the conventional wisdom that the output declines following financial crises are uniformly large and long-lasting.” In fact, the declines are “on average only moderate.”
So much for the “financial crisis ate my recovery” lie. Bad policy, not the financial crisis, is why we’ve had such pathetic economic performance for five years.
Even more interesting is who authored the study: Christina and David Romer. If that first name sounds familiar, it should. She was Obama’s chief economic adviser for the first two years of his presidency.
Nor are she and her husband, both well-regarded liberal-leaning economists at the University of California, Berkeley, alone in their conclusions.
An earlier, extensive study of U.S. recessions by Michael Bordo of Rutgers and Joseph Haubrich of the Federal Reserve Bank of Cleveland found that, on average, recessions that happen due to financial crises tend to have faster recoveries — not slower ones.
In short, treat comments from left-wing politicians about the slow expansion with extreme skepticism. As new data suggest, Obama’s incompetence, not the financial meltdown, is why the recovery was such a disaster.