Deutsche Bank Research

US Economy: Obama’s Track Record

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The October ISM (51.7) mustered its second 50-plus reading in a row, the unemployment rate remained below 8% and consumer confidence leaped upwards in Sep. and Oct.

While these data propelled markets with their short-term focus, voters might ask themselves whether they are better off than in Jan 2009 when Obama entered the White House and the Lehman collapse had just resulted in the worst quarterly slump of the US economy (-8.9% qoq, saar) since Q1 1958, which obviously makes these kinds of comparison a bit unfair. Revisions together with the October payrolls have brightened the labour market situation somewhat. Still, the unemployment rate today (7.9%) is just 0.1pp lower than in January 2009 and payrolls are only 194k higher. The fiscal deficit (central government) peaked at 10.1% of GDP in 2009 and has come down to some 7% this year, little consolation since the debt level increased from 79.9% of GDP (Q1 2009) to a whopping 101.8% (Q3 2012) during his term.

Finally, although GDP per capita has risen by 4.3% (in real terms) since Q1 2009, this still marks the shallowest recovery by far in recent decades. Moreover, according to annual data the income gains between 2008 and 2011 were largely enjoyed by the top 5 percent of the income distribution. Overall, a pretty mixed bag of data for US voters to consider who, on top of this, will probably give different weights to these indicators depending on their economic and social status.

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Published with kind permission of Deutsche Bank Research.


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