President Obama inherited an economic collapse from President Bush. Despite the vast sums of money being printed by the Federal Reserve, the increase in government budgets and consumer spending on the rise, this is the slowest economic recovery since after the Second World War.
According to a new report from the Congressional Research Service (CRS), the pace of United States economic growth since 2009 has been slower than the previous 10 expansions. In fact, this is the worst recovery rate since 1949.
During the last 10 economic expansions, the gross domestic product (GDP) grew by an average of 4.3 percent. President Obama’s economy has grown at an average annual rate of just two percent.
“The economy is now 34 quarters into the current business cycle, and real GDP has only increased by about 10 percent, in comparison to the 1980 business cycle in which real GDP increased by more than 30 percent after 34 quarters,” the report stated. “Based on previous experience with severe recessions, some anticipated that the economy would grow at an above average pace once the economy emerged from the 2007-2009 recession. However, in spite of the severe nature of the most recent recession, the anticipated catch-up growth has yet to materialize.”
So, what is happening exactly? The CRS alludes to secular stagnation.
With vast monetary expansion and various positive economic data points coming from all over the national economy, the boom-bust cycle purports that we’re in the boom phase. However, is this a matter of being in a soft boom economy?
Speaking in an interview with the Washington Free Beacon, Peter Schiff, president and CEO of Euro Pacific Capital, says it doesn’t seem like much of a recovery “because it is wholly artificial,” one that has been “manufactured by Federal Reserve stimulus in the form of quantitative easing and zero percent interest rates.”
“I expect that we will have very low growth, or even negative growth as long as the Fed continues to ‘stimulate’ the economy,” Schiff said. “Frankly, I do not believe we have achieved even 2 percent growth over the last five or six years. The only reason we can even get GDP at that level is because the Fed has used extremely low inflation estimates, far below 1 percent. If they admitted inflation was higher, growth would have been reported even lower.”
He added that the U.S. is close to a recession within the next year or two.
“Although I believe we are already in a recession, I think the chances for an official recession this year or next are very high,” Schiff said.
In any event, Obama will be the only president in U.S. history who has not delivered three percent economic growth in a single year (SEE: Obama will be only president in U.S. history who did not deliver 3% economic growth in a single year). Here is what we reported in late April:
If economic growth does not go beyond 2.67 percent this year then Obama will have the fourth worst economic record in U.S. history. On a list of 39 presidents, he would rank behind just ahead of Presidents Herbert Hoover (-5.65 percent), Andrew Johnson (-0.70 percent) and Theodore Roosevelt (1.41 percent).
We are in some very interesting times, indeed!
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