Obama's Economy Stumbles Again with a 0.2% Quarter

 

IBDEditorials.com

President Obama signs the economic stimulus bill in Denver on Feb. 17, 2009. AP

GDP: The president described the rioting in Baltimore as a "slow rolling crisis," but the metaphor seems more apt for his economy.

Sorry, even a frigid winter can't explain the first quarter's 0.2% downer. We have here a long-term Obama trend, a "rolling crisis" of anemic growth in output and employment.

With the latest numbers, the economy is now $2.5 trillion behind where it was at this stage of the Reagan recovery. In other words, if we had had the same inflation-adjusted pace of expansion under Obama as we had under the Gipper, the economy today would be $2.5 trillion larger, or almost $20,000 on average per family.

The difference over time between a 2% and a 4% growth trajectory is huge. Not only is this recovery lagging way behind the supersized expansion of the 1980s, it has also been the slowest recovery from a recession in at least 50 years.

Obama's spin forever will be that he saved America from a second Great Depression. But his own estimates on job growth show that the economy performed worse than it would have without the trillions of dollars of government borrowing.

So why the 2% rut now when we could be growing twice as fast? Usually a severe contraction like the housing meltdown in 2008-09 creates a snapback effect with more rapid growth to make up for the loss in output. This recession-recovery cycle has produced the opposite effect.

One statistic in the latest GDP report sticks out like a sore thumb: Business "nonresidential fixed investment" — or spending by companies on plant and equipment and facilities and technology fell by 3.4%. (Spending on structures fell a godawful 23%.)

This is a fairly good indicator of where the economy's headed. Business investment in this recovery has been slow, and that may be a result of the business-bashing that goes on in Washington month after month.

The Obama policies — tax increases on investment, ObamaCare, an ever-expanding federal debt, EPA regulations — need we go on? — haven't helped much either.

Obama blames Republicans for blocking his agenda of more debt and spending on social programs and shovel-ready projects. In his calculus, Washington hasn't borrowed enough money.

His supporters would have us believe that the flimsy growth we've been experiencing is a "new normal" for America and this is the best we can do. Nonsense.

Even picking off some of the economy's low-hanging fruit by lowering the corporate tax, building the Keystone pipeline, repealing anti-employment features of ObamaCare and reining in the EPA would create jobs and new businesses. But Washington can't even get these things done.

The challenge for the nation is to get back on a 4% growth path, and it will be interesting to hear what the Republican candidates for president and Hillary Clinton have in mind. A discouraged nation is all ears.