Posted by: Doug Henwood | March 2, 2012

Morning again in America?

So it looks like Obama plans to sing from the Reagan songbook for his campaign—specifically from the “Morning in America” pages. In case you were too young the first time around, or now are too old to remember, the original went something like this:

The logic is this: Reagan got re-elected during the recovery after a deep recession, so Obama can do the same. Also, Reagan whipped Grenada’s ass and Obama killed Osama.

Foreign victories don’t count for much in election campaigns but economic conditions count a lot. So how bright is Obama’s morning compared to Reagan’s?

TPM took a look at this question earlier today (Is It Morning — Or Dawn — In America?), but in a very incomplete way. Here’s a broader look. And the answer is: not as bright as 1984, actually.

For most people, what matters most is the job market. And today’s job market lags 1984’s.

First, total employment.

Both presidents endured sharp hits to employment (though for Obama, the declines extended those of his predecessor). Obama’s hit was earlier and deeper than Reagan’s. But Obama’s recovery has been weaker. By Reagan’s 37th month in office, employment was nearly 2% above where it was when he was inaugurated; for Obama, employment is still down almost 1%.

Now unemployment.

Reagan suffered a higher and later peak in unemployment (10.8% in month 23, compared to Obama’s 10.1% in month 10), but enjoyed a much steeper drop. As of the 37th month, Reagan’s unemployment rate was 8.0%, a decline of 2.4 points from a year earlier. Obama’s 8.3% is just 0.8 point down from a year earlier. And Obama’s unemployment rate is worse than it looks, since vast numbers of people have dropped out of the labor force and therefore aren’t counted as unemployed. In the year before Reagan’s 37th month, the participation rate—the employed plus the unemployed as a share of the adult population—rose by 0.1 point, as people were drawn into an improving job market. Obama’s, however, is off by 0.5 point, as people discouraged by job prospects give up on the search.

As LBO has shown in the past, you can explain most post-World War 2 presidential elections using a model consisting of just two variables—inflation-adjusted after-tax income per capita and presidential approval. If income is positive and approval over 50%, the incumbent or another member of his party is highly likely to win. Things are not looking so good for Obama on that score—though the model is best when run with numbers for the spring, not the late winter, so let’s hold off on predictions for a few months.

Here’s the income comparison. (Officially the measure is known as real disposable personal income [DPI] per capita.)

DPI took a much sharper hit under Obama than Reagan, and has been flat for a year-and-a-half. DPI is still 0.4% below where it was when Obama took the oath of office. The comparable figure for Reagan is up nearly 8%. DPI is an average, and can be distorted upwards by action at the high end, but it’s still a decent broad measure, and by that measure, Obama’s doing very badly. (Not that it’s his personal fault, of course.)

And how about approval? On that, Obama’s doing a little better than might be expected given those crummy income numbers—but still, Reagan was 9 points ahead of Obama (54% vs. 45%). And Reagan was up 17 points over the previous year—Obama’s down 4.

So is it morning once again in America? Not really. Predawn maybe.

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Responses

  1. Also, Reagan whipped Grenada’s ass and Obama killed Osama./////// You may be too politically young to remember , but Grenada had a socialist government and Bin laden was a rightwing anti-communist. So, Obama is the opposite of Reagan .

  2. I don’t really understand the more specific points the TPM article is making. It’s only evidence is GDP growth seems to me and the article doesn’t really hold up if you read it closely.

    For instance it talks about government spending, but as I understand it government purchases have been down compared to the Reagan era. Business investment and exports are up where they usually would be but government spending is down, the housing market is in the dumps (compared to the Reagan era specifically) and people are still deleveraging their debts. What if the last two turn around?

    Romney is a pretty bad opponent but Republicans hate Obama. How good was Mondale? From Wikipedia on Walter: “Southern whites and northern blue collar workers who usually voted Democratic switched their support to Reagan because they credited him with the economic boom and saw him as strong on national security issues.” Will the economy improve enough for Obama to take the swing states?

  3. You missed Doug’s point entirely.

  4. Justin, Charles’s mission is to defend Obama at all costs.

  5. Profit rates look to have peaked for this cycle and there is plenty of debt left out out there to be liquidated. The real estate mess is actually worse, it just has been offloaded to the Federal Reserve and hidden as mark to model on banking books.

    And whatever recovery that exists is based on the dismantling of wage structures. The DeLong’s etc. who celebrate the ‘rebirth’ of GM won’t mention how it has been accomplished.

    The US as the low-wage country of the OECD — which it basically is — is not a promising economic model. The model is based upon destroying ‘human capital’ , i.e. education and skills and compensating for resulting low productivity with a huge pool of indigent and desperate workers. In other words, the exact opposite direction a country like China wants to go.

    Jim Rogers is mostly wrong, but he said before moving to Singapore that the U.S. elite is devoted to this strategy and that you can’t ‘devalue your way to prosperity’.

  6. Reagan rode an updraft in the general downward spiral of American capitalism. To do that required the wholesale financialization of the economy, the export of jobs in exchange for cheap foreign manufactured goods, and the first big steps toward the immiseration of all the American workers who were running around with flags on their hats thinking the party would never end.

    We are far past that point. It has nothing to do with Obama, who–apart from a few insincere “left” concessions in the lifestyle arena and (ask Rahm Emanuel what he thinks of Gay Rights while the two of you are pissing side by side in a bar)–stands far to the right of Reagan on military, economic, and so-called security issues. The ridiculous fraud of so-called “healthcare”–i.e., the insurance company bailout–is too patent to be worth mentioning.

    After Obama, the President can have any citizen killed merely by passing the word. While this is supposed to be limited to Arabs (synonymous with terrorists) no authority has any oversight of this power. It can be and in fact is being used as a pretext by the subhuman filth of the federal police establishment to compile enemies lists for the eventual use of Rick Santorum–if not now, four years from now.

    And who knows how many bleeding corpses Obama will ultimately need to cinch this election? If that knife-wielding, foul-mouthed sociopath Emanuel, loyal as he is only to a foreign government, has anything to do with it, we will see rows of Occupier heads rotting on stakes around the Democrat Convention site in Chicago later this year. The dead will all be U.S. citizens.

    Obama has set up a penitentiary in Illinois as a permanent facility for secret detention of Night and Fog arrestees. This is his sarcastic, cheap-shot response to the demand that Guantanamo be closed. The Republicans thought they had to put their torture facility somewhere beyond the scope of U.S. laws.

    Obama, in the spirit of Mickey Rooney, has said, “Gee kids, we can seize, torture, and kill political prisoners right here!!”

    Reagan not only never dreamed of such a thing, he might actually have been appalled by it (though Nixon would have approved).

    It’s the working out of a systemic crisis reaching back sixty or seventy years. The weak performance of the economy just means a) that the murderers and thieves who run our corporations, our military, and our government are too gorged with blood and booty to have much of an appetite, and b) the old capitalist shell game is running out of shells. It’s time for the iron hand sans glove. Then, for the 1%, it’s farewell Poughkeepsie and hello Gstaad.

    Obama and his opponents are merely the symptoms of this American disease. He doesn’t have–and nor did Reagan have–much scope for initiative at all.

  7. “Profit rates look to have peaked for this cycle and there is plenty of debt left out out there to be liquidated. The real estate mess is actually worse, it just has been offloaded to the Federal Reserve and hidden as mark to model on banking books.”

    Links? The problem the left doesn’t understand is that if you keep crying wolf and keep being proven wrong people don’t listen to you and you have no movement. You get a credibility problem.

    Doug says Federal Reserve policy doesn’t matter, but with Reagan you had the Fed creating the recession and creating morning in America via the housing sector by lowering rates. Obama began with a financial crisis and a balance sheet recession with the Fed not doing as much as it could because of political pressures. This is an old-timey 19th century turn around without much help from the government. Housing prices are back to 1990s level and we have many, many financial institution going under or merging with others (Lehman, Bear Stearns, Fannie Freddie, Wachovia Merrill Lynch, Countrywide, Washington Mutual etc etc).

    “‘you can’t devalue your way to prosperity’.” FDR went off the gold standard during the Great Depression. Do your homework or you’ll get a credibility problem.

  8. Peter, it’s not my responsibility to do research for you.

    But if you don’t understand that housing remains a catastrophe refer to Case-Schiller.

    As for currency free-for-all before WW2, well that really didn’t turn out so well, did it ?

    I’m glad you seem to agree, implicitly perhaps, that the U.S. is embarking on a path of mass human capital destruction at a time when the developing world is doing the opposite.

  9. […] Morning again in America? (lbo-news.com) Rate this: Share this:StumbleUponEmailRedditPrintTwitterLinkedInFacebookDiggLike this:LikeBe the first to like this post. […]

  10. I always gnash my teeth when historical “lessons” drawn from statistical correlations are applied to presidential elections. In this particular case the most obvious objection is that Obama is blessed to have the opposition that he does — which is practically the story of his entire life in politics. The Republican field is amazingly weak. Dems are justifiably disenchanted, but the same is true of rank-and-file Republicans. On balance, I suspect the Dems will be able to rally the dwindling ranks of their die-hards a notch better.

    But it will certainly be an election where non-participants — people voting “abstain”, if you will — are the majority of the population. (My own vote will be “abstain”.) Whoever wins this circus will have a “mandate” encompassing, generously, maybe a quarter of the adult population. This is how legitimacy evaporates.

  11. […] Morning again in America? (lbo-news.com) […]


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