Recession may be past, but frustration persists
Obama touts efforts, defends stance toward business
WASHINGTON – On the day that the Great Recession was officially declared to be part of history, President Barack Obama confronted deepening angst from business leaders and ordinary Americans who have little faith that the recovery is for real.
The determination that the U.S. recession ended in June 2009, made by a panel of private economists who are the arbiters of business cycles, confirms that the 18-month downturn was the longest recession of the post-World War II era.
The nation – and the political system – remain haunted by that downturn. Vast majorities of Americans think the nation is still in recession, regardless of what scholars say.
And with the unemployment rate at 9.6 percent and growth too slow in recent months to drive the rate down, economic distress has become the defining backdrop of Obama’s first two years in office.
The crisis may be over; the stock market has risen 42 percent since he was inaugurated, including 9 percent this month. But the frustration over the slow recovery remains. Obama took the stage at the Newseum in Washington on Monday in an hourlong town-hall-style meeting sponsored by the financial cable network CNBC, facing questions that reflected the nation’s deep discontent.
A 30-year-old law school graduate said he’s no longer able to make the interest payments on his educational loans, much less afford a mortgage or a family. He said that he had been inspired by Obama’s campaign. But now, “that inspiration is dying away,” he said. “I really want to know: Is the American dream dead?”
“Absolutely not,” Obama replied. “We are still the country that billions of people in the world look to and aspire to,” he added.
Another woman, who said she voted for Obama, told him she was deeply disappointed with her lot. “My husband and I thought we were beyond the hot dog and beans of our lives. … Is this my new reality?” she asked.
“I understand your frustration,” Obama said. He defended his administration’s efforts to help the middle class, listing achievements such as better protection for mortgage loans and health insurance for those with pre-existing conditions.
He also sought to instill confidence among the investor and executive classes, who have deserted him in droves over the past year.
Obama’s tone was different than in recent appearances, as he eschewed some of the more populist touches that have accompanied his attacks on Wall Street bankers. Moderator John Harwood, CNBC’s chief Washington correspondent, asked early on whether the president was “vilifying business.”
“Absolutely not,” Obama said. “Look, let’s look at the track record here. When I came into office, businesses – some of the same commentators who are on CNBC – were crying ‘Do something!’ because, as a consequence of reckless decisions that had been made, the economy was on the verge of collapse. Those same businesses now are profitable; the financial markets are stabilized.”
Although he avoided business-bashing rhetoric, Obama defended his history on a range of policies, pushing back against the idea that his record on health care reform, financial regulation and intervention in the automobile business has hurt the markets and business community. He said that Wall Street is thriving, pointing out billion-dollar bonuses, and that the auto sector has been revived.
And he did not let up in his support for allowing the George W. Bush administration’s tax cuts for the wealthy to expire. Business leaders, Republicans and moderate Democrats have opposed any tax increases, saying the economic recovery is too fragile.
Obama said his administration is looking at the possibility of a payroll tax holiday, in addition to the research-and-development tax breaks for corporations already proposed.
“We are willing to look at any idea that’s out there that we think will help. But we’ve got to do so in a responsible way. We’ve got to make sure that whatever it is that we’re proposing gives us the best bang for the buck. A lot of ideas that look good on paper, when you start digging into them it turns out that they’re more complicated and they may end up not working the way they’re supposed to.”
Earlier Monday, the business-cycle dating committee at the National Bureau of Economic Research had announced that the recession that began in December 2007 had reached its technical end in June 2009.
The committee tried to make it clear that it was not asserting that the economy has returned to full health. It frequently takes months or years after a recession officially ends to return to low unemployment, rising incomes and other trappings of prosperity.
“In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity,” the committee said in its announcement.
Moreover, the panel said, “any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007.”
Mark Zandi, chief economist at Moody’s Analytics, said it was noteworthy that the panel settled on June as it was that month during which the spending from the Recovery Act stimulus was at its maximum.
“One conclusion is that the stimulus played an important role in bringing the recession to an end,” said Zandi, who has been an economic adviser to officials and lawmakers in both parties.