How badly has the US economy performed under President Barack Obama? Ronald Reagan posed the political version of this question in his presidential debate against Jimmy Carter in 1980, when he asked: “Are you better off than you were four years ago?” It is, naturally, the question Mitt Romney asks now.
At first glance, the answer is: just a little better off. In the second quarter of 2012, real gross domestic product was 5.2 per cent higher than in the fourth quarter of 2008, the last full quarter before Mr Obama took office. The seasonally adjusted unemployment rate of 7.8 per cent in September was the same as in January 2009. Yet, since he took office when the economy was in the throes of a huge financial crisis, analysts must ask whether this performance is decent in the circumstances, as supporters argue, or disappointing, as opponents insist.
John Taylor, professor at Stanford University, a highly regarded macroeconomist, has no doubt of the answer. In a recent blog, he argues that strong growth normally follows US financial crises, the exception to this rule being the current recovery (see chart). Moreover, he argues, bad policy is to blame. True, Prof Taylor is a member of Mr Romney’s economic team. Yet the question remains: is he right? The answer is: no. But it is important to ask why.