Obama's economic policies working...

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Nice article, several pages to it in the link.




It's never easy to separate politics from policy, and the past 18 months have only increased the degree of difficulty. The U.S. has been through a historic financial crisis followed by a historic election and a series of historic federal gambles ? from bailing out AIG and GM to passing a $787 billion stimulus and a $940 billion health-care reform bill. All that risk has made policy more complicated and politics more fraught ("You lie," "Baby killer").

A Bloomberg national poll in March found that Americans, by an almost 2-to-1 margin, believe the economy has gotten worse rather than better during the past year. The Market begs to differ. While President Obama's overall job approval rating has fallen to a new low of 44 percent, according to a CBS News Poll, down five points from late March, the judgment of the financial indexes has turned resoundingly positive. The Standard & Poor's 500-stock index is up more than 74 percent from its recessionary low in March 2009. Corporate bonds have been rallying for a year. Commodity prices have surged. International currency markets have been bullish on the dollar for months, raising it by almost 10 percent since Nov. 25 against a basket of six major currencies. Housing prices have stabilized. Mortgage rates are low. "We've had a phenomenal run in asset classes across the board," says Dan Greenhaus, chief economic strategist for Miller Tabak + Co., an institutional trading firm in New York. "If Obama was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the President."

Little more than a year ago, financial markets were in turmoil, major auto companies were on the verge of collapse and economists such as Paul Krugman were worried about the U.S. slumbering through a Japan-like Lost Decade. While no one would claim that all the pain is past or the danger gone, the economy is growing again, jumping to a 5.6 percent annualized growth rate in the fourth quarter of 2009 as businesses finally restocked their inventories. The consensus view now calls for 3 percent growth this year, significantly higher than the 2.1 percent estimate for 2010 that economists surveyed by Bloomberg News saw coming when Obama first moved into the Oval Office.
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Video
Obama hits his stride
Discussing whether President Obama getting his game back will carry him through Fin Reg, with Eamon Javers, Politico.com

CNBC

The U.S. manufacturing sector has expanded for eight straight months, the Business Roundtable's measure of CEO optimism reached its highest level since early 2006, and in March the economy added 162,000 jobs ? more than it had during any month in the past three years. "There is more business confidence out there," says Boeing CEO Jim McNerney. "This Administration deserves significant credit."

It is worth stepping back to consider, in cool-headed policy terms, how all of this came to be ? and whether the Obama team's approach amounts to a set of successful emergency measures or a new economic philosophy: Obamanomics.

For most of the past two decades, the reigning economic approach in Democratic circles has been Rubinomics, a set of priorities fashioned in the 1990s by Bill Clinton's Treasury Secretary, Robert E. Rubin, the former co-chairman of Goldman Sachs. Broadly, Rubinomics was a three-legged stool consisting of restrained government spending, lower budget deficits, and open trade, which were meant in combination to reassure financial markets, keep capital flowing, and thus put the country on a path to prosperity.


On the surface, Obamanomics couldn't be more different. The Administration racked up record deficits as it pursued a $787 billion fiscal stimulus on top of the $700 billion bailout fund for banks and carmakers. Obama has done close to nothing to expand free trade. And while Clinton pleased the markets with a moderate, probusiness image, Obama has riled Wall Street with occasional bursts of populist rhetoric, such as his slamming of "fat cat bankers" on 60 Minutes last December.

Why the Obama economics plan is working - BusinessWeek.com- msnbc.com

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Cover-story author Daniel Gross says the economy is making a strong comeback, defying the odds and surprising the naysayers. "The turnaround we've had since [Lehman Brothers' bankruptcy], while not completely satisfying, has been pretty remarkable," he tells Henry Blodget in the accompanying clip.

A combination of unprecedented government intervention matched by rapid restructuring and increased productivity in the private sector has resulted in an economy stronger than anyone would have imagined just 18 months ago, Gross argues. Although the National Bureau of Economic Research - the official tracker of recessions - continues to wait to officially declare its end, Gross dismisses their hesitation, saying economic forecasters "have consistently underestimated the rate of economic growth."

Gross points to several factors to back his case:

* - The economy is growing. The U.S. economy has gone from shrinking at a 6.4 percent annual rate in the first quarter of 2009 to growing at a rate of 5.9 percent at the end of the year.
* - Bull market. The Dow Jones Industrial Average is now hovering around 11,000, having rebounded 70% off the bottom.
* - Job creation. The unemployment rate remains stubbornly high; however, 162,000 jobs were created in March. That's a long way from losing 800,000 per month at the height of the panic. Job growth "is going to be slower than many people would like it to be but I think it's going to be faster than many of the professional forecasters are expecting it to be," he says.
* - Productivity. From the fourth quarter of 2008 to the fourth quarter of 2009, productivity rose 5.8 percent.

True, too many people are out of work and the housing market remains stuck in the mud but "we're having this recovery in spite of housing," Gross notes.

Magazines don't have a great track record with their predictions. Business Week's "The Death of Equities" cover story in August of 1979 ushered in the greatest stock market bull run in history. Gross isn't worried about the "jinx", noting he and his colleagues at Newsweek have been prescient during the crisis. In January 2008 they were correct in reporting the country was headed for recession and were on the money again when they called an end to the recession in July of last year.

Let's hope he's right again.

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