Friday, January 13, 2017

Obama's Economy in One Chart

At almost every opportunity, Barack Obama touts his record on the economy.  In fact, at his final press conference as President, he said this:
As I was preparing to take office, the unemployment rate was on its way to 10 percent. Today it is at 4.6 percent, the lowest in nearly a decade. We've seen the longest streak of job growth on record, and wages have grown faster over the past few years than at any time in the past 40.
Of course, the implication of that statement is that he, and he alone, saved the country.  That, without him, we would still be in recession.  But, guess what?  From the Federal Reserve's perspective, we pretty much still are.  The primary job of the Federal Reserve (our central bank) is to keep our economy stable and growing at a reasonable clip.  When the economy is overheating, the Federal Reserve increases its prime lending rate (the Fed Funds Rate) to make borrowing more expensive, and thus, retard economic (buying) activity.  On the other hand.  When the economy is in recession, the Fed Funds lending rate is lowered to stimulate economic activity by making borrowing cheaper and more attractive.  With that in mind, note this chart of Fed Funding rates (prime interest rates) over the last 65 years:

Click on Chart to Enlarge or Select Link Below
What this clearly shows, is that the Federal Reserve has kept its lending rates at the lowest levels in the last 65 years; and, for an unheard of period of time.  Still, almost 7-1/2 years past the end of the recession, rates are still below any other rates on the chart.  More importantly, this graph refutes Obama's claims of job and wage growth.  If those claims were really true, the economy would be firing on all cylinders and the Federal Reserve would be forced to raise interest rates to keep the economy from overheating due to too much buying activity.

However, just like most of Obama's claims, there are few facts to support them.


Transcript: Obama’s end-of-year news conference on Syria, Russian hacking and more:

Source of Chart:

Video: Federal Funding Activity Explained:


No comments: