Today’s employment report showed 150,000 net new jobs in December and an unemployment rate of 4.7 percent. The United States is very close to full employment. Wages also grew up 2.9 percent last year. With this being the last full month of Barack Obama’s presidency, it’s time to take stock and make at least some initial judgments.
Obama’s terms saw the creation of more than 11 million jobs and — less connected to the overall health of the economy — a roaring bull market on Wall Street. He inherited an economy in free fall from the Panic of 2008. Whether he “saved” the nation from a second Great Depression has been debated by economists and soon will be argued by historians. With an assist from Bush Treasury Secretary Hank Paulson, a nearly $1 trillion stimulus from the Democratic Congress and the aggressive policies of the Federal Reserve, he did pull us back from the brink of much worse.
After the 2010 election, he faced a GOP-controlled Congress using scorched-earth tactics to oppose him and measures to fill the enormous hole in demand left by the collapse. Even so, policies from TIGER grants to pushes for job training and export growth, Obama tried. He saved General Motors and its vast supply chain. He didn’t do “stupid stuff,” to use his cautionary axiom. Although the U.S. economy grew slowly, it is doing better than the rest of the world.
Obama’s most controversial legacy will be the taxpayer bailout of Wall Street and the big banks. His pledge in 2008 was to save the financial system and then fix it. But the fix, the Dodd-Frank Act, was deeply compromised by bank lobbying. The too big to fail banks for bigger. The banksters got away with it. Not one major criminal prosecution or clawback of compensation happened. Millions of homeowners were not so fortunate.
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This Week’s Links:
• Wherein Hayek agrees with DeLong | Uneasy Money
• Market failure and income distribution | Crooked Timber
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• China sees opportunity as TPP fades | Marketplace
• Why Trump needs to take the economy more seriously | Mark Thoma
• The housing inflection point | Josh Lehner
Today’s Econ Haiku:
How on earth did we get here?
I still back in March