The question Americans should be asking ourselves isn’t whether we’re better off than we were four years ago. It’s whether we’re better off than we were 80 years ago.
Associated Press
Long lines for a free meal, like this one outside New York’s municipal lodging house in 1932, were common during the Great Depression.
Unemployment falling below 8 percent in September was certainly good news for the president politically, but it has not stopped his opponents from charging that the recovery under Obama has been slower and weaker than that following any other modern recession. As Mitt Romney likes to say, “This is not what a real recovery looks like.”
He’s not alone. Karl Rove’s Crossroads GPS put out an ad that begins with Scott Pelley of CBS News saying, “This is the worst economic recovery America has ever had.” It goes on to charge that this is the result “of President Obama’s failed stimulus policies.”
The performance of Barack Obama has been measured against those of many previous presidents, including Franklin D. Roosevelt, Ronald Reagan, Bill Clinton and George W. Bush.
But the most appropriate presidential term to use as a benchmark is Herbert Hoover’s. He was the last president to face an economic crisis on a scale similar to the one that confronted Obama when he took office.
I have been studying the Great Depression for the better part of four decades. A comparison of these two presidencies is both clarifying and highly favorable to Barack Obama. Mitt Romney himself has drawn attention to the implicit parallel between the crises faced by Hoover and Obama. “This is the slowest job recovery since Hoover,” Romney declared in June 2011. He did not, of course, intend the association to be a positive one for the current president. Obama has returned the favor. In the final debate, he told Romney that “when it comes to our foreign policy, you seem to want to import the foreign policies of the 1980s, just like the social policies of the 1950s and the economic policies of the 1920s.”
While everyone knows that the economic collapse that began in 2008 was a major disaster, most people have come to believe that it was not as dangerous as the one that began in 1929, the year after Hoover was elected president. Part of the reason for this impression is simply linguistic: the current situation has come to be called the Great Recession, which does not sound as bad as the Great Depression. More important, we now have a social safety net that somewhat eases the impact. And as the figures below will confirm, the truth is that our very bad situation today is not nearly as bad as things were eight decades ago, when Hoover was seeking re-election.
But it does not necessarily follow from the comparatively better situation today that the 2008 collapse was that much less severe than 1929’s. In fact, by many measures, what began four years ago this fall was even worse than what started in the fall of 1929. World industrial production, world trade and worldwide equity prices all fell more sharply in 2008-9 than they did in 1929-30. The prospect of a second Great Depression was very real when Barack Obama took office.
The genuine similarity of the situations they faced is the reason why the economic record under Hoover is the most meaningful gauge by which to measure the effectiveness of Obama’s recovery policies.
And, contrary to the charges made by his political opponents, the main reason that the Panic of 2008 became the Great Recession instead of the Second Great Depression is that the policies that have been employed by the Obama administration to combat it have been so much better than those undertaken by the Hoover administration in 1929. One major reason why the recovery has been so slow is that, thanks in no small part to Obama’s allegedly “failed stimulus policies,” the recession officially ended a scant nine months after the 2008 crash. In contrast, the economy was still in its deepening downward spiral more than three years after the 1929 crash. This difference means that the clock on recovery was started at much earlier point for Obama.
Timing is critical to public perception. The fact that Barack Obama took office only four months after an economic collapse has made it possible for his opponents to convince many voters that it is his policies, not those of his predecessor that are at fault. When Herbert Hoover sought re-election in 1932, he had been overseeing an economy in free fall for three years, and voters had no confusion about whom they should blame.
Let’s compare the records in the most important statistical categories of the two presidents who faced the worst economic collapses in the last hundred years.
Unemployment
The government did not collect employment data during the Hoover years, but the best estimate indicates that unemployment soared from 3.1 percent when he took office. (Since the 1929 depression did not begin until seven months after Hoover took office, the comparison with the record under Obama is not exact, but the very different trajectory is clear.)
Under Obama, unemployment continued to rise in the early months of his administration, clearly the result of the near-depression that he inherited, peaking at 10.0 percent in October 2009. The improvement since then has been painfully slow, but it has moved in the right direction, reaching 7.8 percent — a record vastly better than that in the last similar collapse.
G.D.P.
G.D.P. plummeted by more than 25 percent under Hoover; it has increased by almost 7 percent under Obama.
Stock Market
Share prices had their worst losses in history under President Hoover, losing four-fifths of their value during his term. Under President Obama, the stock market has had the second largest average annual gain experienced under any president (the best was under that other raise-taxes-a-bit-on-the-wealthy president, Bill Clinton), so far increasing its value by almost two-thirds.
These comparisons are particularly relevant in the current election year because today’s Republicans are ideologues, as Hoover was, although their faith in the market and “trickle-down economics” is far more absolute than his was. It is an ideology that has failed disastrously twice before, in 1929 and 2008, yet Republicans propose to try it again.
Robert S. McElvaine is a historian at Millsaps College. His most recent book is a 25th anniversary edition of “The Great Depression: America, 1929-1941.” He is currently completing a book manuscript, “Oh, Freedom! – The Young Sixties.”