"My fellow Americans." Folksy but dignified, gruff in a daddish way, Barack Obama's particular take on the presidential speech is among the most recognizable soundbytes of this decade, but on Tuesday, we may have heard it for the last time. Obama delivered his farewell address in Chicago to a sympathetic crowd (he even had to chide them at one point for chanting "four more years").
He gave the crowd plenty of lines to cheer as he rattled off a list of accomplishments: ending the recession, rescuing the auto industry, clocking "the greatest stretch of job creation in our history," reaching a nuclear weapons deal with Iran, reopening relations with Cuba, killing Osama bin Laden, providing health insurance to 20 million people and making same-sex marriage legal – not to mention pushing stocks to all-time highs.
Opponents and even some supporters will object to many of these claims: It remains to be seen whether Secretary Kerry's deal "shut down" Iran's nuclear program, for example. But when it comes to the economy, at least, we have the ability to put numbers on Obama's achievements right now.
Start with the Great Recession. By any definition, the U.S. economy has escaped the recession that marred Obama's first days in office. Real (inflation-adjusted) gross domestic product (GDP) shrunk at an annual, seasonally adjusted rate of 8.2% in the fourth quarter of 2008, immediately prior to Obama's first inauguration on January 20, 2009. In the third quarter of 2016 – the most recent data available – it grew 3.5%, marking its tenth straight quarter of growth.
As the economy recovered, people went back to work. Obama loves to tout his administration's record 75 straight months of job growth – although he declined to drop the number Tuesday night – as well as the fall in the unemployment rate from a dire 10.0% in October 2009 to last month's (preliminary) 4.7%. That level, at least to this decade's economists, signifies "full employment," if not an overheating economy.
And yet not everyone has returned to work. Many manufacturing jobs seem to be gone for good, as overall employment in the sector remains below its December 2008 level. The president hinted at this disconnect at the very beginning of his address, though he was talking about a different decade: "I first came to Chicago when I was in my early twenties … It was in neighborhoods not far from here where I began working with church groups in the shadows of closed steel mills."
That the mills have continued to close even as the rest of the economy booms fueled a powerful argument against Hillary Clinton, who ran on a "four more years" platform. Donald Trump sees foreign competition as the culprit; Obama on Tuesday acknowledged that "trade should be fair and not just free," but blamed automation as well, a factor Trump has largely ignored.
The continued decline of the manufacturing sector is not the only aspect of the Obama economy that invites criticism. Even as the stock market surged –
– real median household income stalled. In 2014 it was 3.0% below its level in 2008. Earnings surged 5.2% to $56,516 in 2015, but even that parting kindness leaves the Obama recovery grasping for an explanation: Why does the average family still bring in 2.4% less than it did in 1999 ($57,909)?
And what did this recovery – spectacular from some angles, tepid from others – cost? The national debt shot up by 95.3% from 2008 to 2016, and now stands at $61,340 per citizen.
Around $4.5 trillion of that debt sits on the Federal Reserve's balance sheet. The central bank did much of the heavy lifting in the wake of the crisis – once taxpayers had handled the pressing matter of bailing out the banks, insurers and carmakers – gobbling up Treasuries in a stimulus program known as quantitative easing. It also cut interest rates to practically zero (in reality a target range of 0.0% to 0.25%) in a bid to spur borrowing, building and hiring through a splash of easy money. Savers suffered. (See also, Danielle DiMartino Booth on the Trump Federal Reserve.)
It was a risky gamble: Pumping money into the economy tends to lead to runaway inflation. Except it didn't happen that way. Core inflation, which excludes volatile food and fuel inputs, struggled to meet the Fed's target level of 2% (the chart below measures the change in CPI; PCE inflation, the Fed's preferred measure, was even more sluggish). Including food and food, prices flirted with deflation for a spell as oil prices plummeted from mid-2014 to early 2016. (See also, 9 Common Effects of Inflation.)
The economy was in a liquidity trap. Borrowing was easy, but borrowers were scarce. Those who did take out loans didn't build factories; many just bought shares. As much as public companies – which are concentrated on the coasts – benefited, an even smaller number of tech "unicorns" did better. Private firms that occupy just a few square miles of Bay Area real estate gobbled up billions in capital, but hired only a handful of highly educated employees.
Obama is right that, economically, America is a "stronger place than it was when we started." When he took office, the economy was in free-fall. Radical, unpopular measures caught it and allowed it to recover.
But not everyone sees it that way. Many wonder why their job never came back even as the unemployment rate plunged. Others wonder why their savings accounts still yield practically nothing even as stock prices have surged. Most voters took Clinton up on her offer to extend Obama's economic legacy, but some of the same geographical and educational disparities that make assessing Obama's economic legacy so complicated, handed the electoral college to Trump.