As the Weekly Standard‘s Jay Cost notes in a column this week, some observers believe President Obama will be well-positioned for re-election if the national unemployment rate dips below 8 percent. Cost presents a more complicated picture for the president.
When we abandon the quick-and-dirty methodology the MSM uses to analyze economic (or, for that matter, any) data, and instead look at matters in historical context, we see an economy that is at one of its weakest point since the end of World War II. As proof of this, consider the following chart. It tracks the actual performance of GDP from 1948 to the present, against a hypothetical scenario in which the economy grew at 3.43 percent every year. Why 3.43 percent? That is the average annual rate of growth in the economy between 1948 (the first year of postwar growth) and 2007 (the year before the current slowdown).
Any time we’re above the dotted line, it means we’ve grown faster than 3.43 percent per year up to that point. Any time we’re under it, it means we have grown slower than 3.43 percent up to that point. As we can see, for most of the postwar period, economic contractions did not knock us off a very robust growth rate. However, the economy has been in a relative wind-down for a decade, due to the fact that the recovery between 2001 and 2007 saw only one year of growth that was greater than 3.43 percent. Now, with the latest recession we have fallen significantly off the long-term trend line, and with growth expected to come in under 3.43 percent in the next two years, we’re going to fall even farther.