… not so good.
On the occasion of the President’s annual State of the Union address, it is an appropriate time to ask yourself the standard question: “Are you better off today than you were four years ago,” (or in this case five years ago)? Chances are the answer is “no.” The economy, though in recovery by some measurements, is still dismal; the national debt is growing at an unacceptable and unsustainable rate; median income, a good measurement of the economic health of the middle class, is stagnant; domestic and international terrorism and violence are on the rise, and Americans’ opinion of the President and the Congress are at or near historic lows.
Lets examine these points one by one.
1. The Economy
On the surface, it appears that the economy is recovering from the Great Recession. The stock market is up year over year. The unemployment rate is down. But, lets look below the surface.
The DJIA, which was 7,000 in February 2009, when President Obama took office, is now over 15,000. It has more than doubled. It is up 14% from January 2013. This is positive for the country’s economic health, right? Not necessarily. This has primarily benefitted the wealthy; they are the ones who own the lion’s share of stocks. The middle class and working poor have derived very little benefit from the DJIA’s rally, particularly since not much of this paper wealth has been used to create jobs. This is one of the ironies of President Obama’s tenure. The primary beneficiaries of his economic policies have been the wealthy.
Unemployment has decreased from near 8% when President Obama took office to about 6.5% currently. Good news, right? Wrong. According to the Bureau of Labor Statistics we are becoming a nation of part time workers. In 2013 3/4 of the new jobs created were part time. From December 2007 through the third quarter of 2013, the latest statistics available, full time jobs actually decreased from 121 million to 118 million, while part time jobs increased from 25 million to 27 million. There are various reasons for this, but my opinion is that employers are creating part time jobs to avoid paying workers’ benefits, especially healthcare. Since healthcare is becoming more expensive, this trend is likely to accelerate.
Median household income, which many economists consider to be one of the most reliable measurements of economic health, especially for the middle class, has been stagnant. According to US Census Bureau statistics, it was $49,777 in 2009 at the height of the Great Recession, and it only rose to $51,017 in 2013. Not significant progress.
Then, we come to the national debt. According to the US Treasury it is over $17 trillion compared to $10 trillion when President Obama took office. To be sure, there are many reasons for this, but the fact is that any economist will tell you that this level of debt is way too high and the percentage of year-over-year increase is unsustainable for a healthy economy. It also has had negative geopolitical consequences.
2. Terrorism and violence
Terrorism and violence are increasing at an alarming rate. Rather than “being on the run” as the Administration has asserted, Al Quaeda has morphed into various splinter groups and is as active as it has ever been. There has been major unrest in Iraq, Afghanistan, Russia, Syria, Libya and Eqypt, among others. In addition, we have had to deal with two very dangerous, rogue states in North Korea and Iran, both of which either possess or will soon possess nuclear weapons and the capability to deliver them. Furthermore, there is the very real danger of a terrorist event at the Olympics next month. Domestically, there were the bombings at the Boston Marathon, as well as many other threats. Finally, the US’s level of respect, both among our allies and our enemies, is as low as I can remember. Do you feel safer today than you did five years ago?
3. Americans’ Opinion of Government
A President’s approval ratings always decline in his second term, especially in the last two years when the President is normally perceived as a “lame duck.” According to Gallup, President Obama’s approval rating is currently 43%. That is not good, but it is better than Congress’, which is about 14%. According to Gallup, that is the lowest it has ever recorded. Clearly, most voters are dissatisfied with all the back- biting and failure to cooperate on the part of both parties. The end result is nothing gets done, and the level of frustration is as high as it’s ever been.
Historically, voters’ dissatisfaction has fallen mostly on the party currently in office. This does not bode well for the 36 Democratic senators who are up for re-election. Many of them, such as Mark Begich (Alabama), Mark Pryor (Arkansas), Mark Udall (Utah), and Mary Landrieu (Louisiana), are trying to distance themselves from President Obama, politically. For example, they have signaled that they don’t want him to help in their respective campaigns. The Dems are in real danger of losing the Senate.
CONCLUSION AND PREDICTION
For all of the reasons cited above, the state of the union is as dire as at any time I can recall, and the immediate prognosis is also poor. Few people are better off than they were five years ago. If you are one of the few, “mazel tov.”
The 2014 mid-term elections will be critical for the future of the country and will be a precursor for the 2016 Presidential Election. In my opinion, there is a strong likelihood that the GOP will recapture the majority in the Senate and also do well in the governors’ races. If so, this will give them a boost for 2016.