The Data That Won It For Obama

I wondered during the final debate whether Mitt Romney might steal a phrase from Ronald Reagan and ask Americans if they were better off than they were four years ago. It has worked for the Republicans before, and all the polling data pointed to the idea that voters were looking at the economy as the top issue.

Yet Romney did no such thing. Perhaps that was because by a number of significant measures, many Americans are better off than they were three or four years ago when America was mired in the epicentre of a global economic crisis. While America is in many cases just catching up to ground lost in the 2008 crash, and while many significant and real doubts remain about the underlying fundamentals of the American and global economies, the American economy has reinflated since early 2009.

Real GDP growth has been sustained:

The S&P500 has gone upward:

So has industrial production:

And total wages and salaries:

And here’s corporate profits:

And although total employment remains significantly depressed, headline unemployment has fallen (and those who have dropped out of the labour force have been entitled to expanded welfare programs):

It seems — although this was a very divided election — that these data provided enough juice to give just enough Americans the sense that although they may not be better off than they were at the turn of the millennium, under Obama things are improving just enough.

Certainly, some groups who have not fared well due to low interest rates such as seniors rejected Obama, too. Other groups, like women, deserted the Republicans on social issues. Yet Republicans looking for reasons why Romney ultimately lost probably need look no further than slow but steady reinflation.

Beneath the surface, this tepid reinflation is very much akin to the economy that got Bush re-elected in 2004. That recovery ended in mania and a bubble and finally a crash when subprime imploded in 2008. It is more than possible that this recovery is equally unsustainable and will end the same way, in crushing disappointment and grinding deflation.

Debt — the fuel of bubbles — is slowly growing again, from a perilously high starting point:

Deleveraging in the new quantitatively-eased environment has been very, very slow. This is a delicate and dangerous balancing act. Total debt levels as a percentage of the economy remain humungous and are a grinding weight on the underlying economy:

The Obama-Bernanke reinflation may well be an illusion built on the shakiest of foundations. And it may end more painfully than even the disastrous Bush-Greenspan reinflation. Yet it was enough to guarantee Obama re-election.

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23 thoughts on “The Data That Won It For Obama

  1. Good reminders (text with charts) and warning (understated) about the debt bubble. We must not forget that the 2008 subprime disaster was caused by the SAME something-for-nothing entitlement snake oil sold by ambitious politicians (Clintons, Dodd, Frank — all Democrats, plus a little Hastert and Bush’s failure to veto) to selfish/gullible/short-sighted voters as during the Obama-Reid-Pelosi $Trillion+ annual deficits and 2012 elections.

    When the “Independent” Mayor of NYC announces support of Obama because of global warming (a proven fraud) and same-sex marriage & abortion (both none of the federal government’s business), We the People better wake up!

    Oh — did anyone tell the voters that $1Trillion = $3,000 per capita debt added each year?

  2. There is no recovery. There is only transfer of wealth and massive debt creation. Small business is on its knees begging for relief. Only those tapped into the government printing presses are doing OK [as well as corporate cartels whose profits are mostly outside of the U.S.].

    Voting is a joke as institutions have made a mockery of the individual.

  3. Another poster commented on the reasons for Obama’s win:

    “90% plus —– Blacks voted for Obama

    75% ———– Hispanics voted for Obama

    60% ———– Millennials voted for Obama

    47% ———– Americans who get Free Shit voted for Obama (which includes a shitload of Crackas)

    .
    That is ALL there is to it. No further need to read, think, analyze, or pontificate.”

    In other words, the truly ignorant, people who are benefiting, people who hope to benefit in the future, and those who want to look the other way. In other words, people who have nothing to lose and everything to gain.

    Aziz, every graph you posted has only been made possible by direct manipulation. Where is the outcry?

  4. Another good comment:

    “We have passed the point that was pointed out by a founding father of this country, (paraphrased) when the majority discovers that it can vote itself goodies from the public purse, the Republic will fail.”

    • I’m afraid that Backwards’ founding father paraphrase* and “That is ALL there is to it. No further need to read, think, analyze, or pontificate” are true.

      * I seem to recall a similar statement from ancient Athens or another early attempt at democracy. And there is the ubiquitous apocryphal parable of the school election landslide win for a candidate whose platform was “If I am elected, I will buy ice cream for everyone!”

  5. Pingback: The Data That Won It For Obama | My Blog

  6. The thing to keep in mind is that this present mess will re-set. No need to jump off the bridge!

    It is also quite instructive when the system reveals its true nature this clearly, as it is the only time when real change becomes possible.

    And change is on the way. 2013 is going to be a VERY interesting year, indeed.

    • The system will [eventually] re-set as what is going on is NOT sustainable. The true nature of all institutions is being laid bare, that is, theft. Many believe that 2013 will manifest the next phase of the crisis.

  7. The far left finds Obama as unpalatable as I do. Sonoma County voted for Jill Stein. I don’t agree with much of Jill Stein’s economic policy. I do agree with her about defence, national security and imperialism, though.

    On a more general level, when it comes to war, empire and individual liberties it seems like most of America is still roughly where it was when Bush was in office, because Romney and Obama are basically the same on every issue.

  8. Amusing to see that millions of people think that either candidate represents them! Talk about collectivist delusions….cant they see clearly that they are just puppets?

      • Fog & Az: The election is over; probable result will be more of the same — not just “more” meaning continuation, but “more” meaning increased.

        Much of what we (the people) can and should do in the next 2-4 years may depend on the powers that be in Washington D.C., but those of us who don’t want to give up can start by facing reality (dropping cliches, “I told you so”s, misleading assumptions, selfish interests, etc.) and start looking for mid-course corrections.

        Some of what really happened:

        1. “The half the people who VOTE for a living” turned out to be MORE than half, especially growing numbers and of Hispanics. The Democratic Party DID “represent them”, because both they and the political con men ignored/hid consequences, such as crushing low income families by government default and/or hyperinflation and degradation of personal and social culture, including increasingly tolerated crime.

        2. Overwhelming biased media, academia, entertainment “celebrities”, government, teacher unions, etc. increasingly exacerbated, encouraged and exploited the above by waging race and class warfare.

        3. The Romney campaign and the traditional GOP DID NOT represent small businesses, oil companies, coal mines, young professionals, non-union workers, medical personnel, investors, etc. whom the Democrats have deliberately opposed

        4. Unprecedented Democratic Party-supported voting fraud may have tipped the scales in some races.

        Shall we passively wait for humanity to improve? Teach and set examples of better/wiser character and behavior, and support organizations (including political ones) that do? Wait for a catastrophic shock treatment? Bug out to a better country (which)?

        The best political solution is, without doubt, libertarianism — that’s what we must keep as our goal. Meantime, should the “loyal* opposition” to the ruling Democrats adjust to meet the entitlement “market” (by Constitutional amendment, not the current lawlessness), or stand firm?

        BTW. Has anyone thought of starting a U.S. “Shadow Government”? The traditional GOP wouldn’t be interested (or capable), but maybe a Libertarian-Tea Party?

        * Most traditional elected Republicans would be loyal to their careers and the party, not to the nation and Constitution.

  9. I don’t know if there was another option other than reinflation. If you didn’t do something in the sort of QE, you would have massive deflation as the amount of credit circulating would come to a sudden halt. You would end up in a debt deflation where incomes fall faster than debts and the economy would go into a death spiral(1929-1932). You must avoid that at all costs. What’s being done now is very similar to what was done in The Great Depression from 1933-1945 (The Lords of Finance by Liaquat Ahamed shows this really well). Back then, the Federal Reserve would buy gold instead of mortgage backed securities and also monetized the deficit (buying US govt. bonds, which the Fed has done).

    Also, to compare the nominal level of debt and say that debt, in nominal terms, is rising means absolutely nothing. The important thing is that debt is falling in real terms. What we need more of now is debt cancellation and I actually think a little more inflation from the Fed would go a long way toward that goal. I think the Fed should immediately set a nominal growth target of 6% in order to systematically wipe out the debts. Deleveragings take a long time–usually 10-15 years minimum. The US is only 4 years into its deleveraging.

    I’m not sure if you’ve seen it, but here is a paper on deleveragings by Ray Dalio at Bridgewater Associates:

    http://www.bwater.com/Uploads/FileManager/research/deleveraging/an-in-depth-look-at-deleveragings–ray-dalio-bridgewater.pdf

    I think the paper above is one of the best papers I’ve ever read.

    • 1/Debt jubilee.
      2/Liquidation, followed by reinflation

      Those two are the main options that I would consider, because they will lower the total-debt-to-GDP ratio to healthier level.

  10. Excellent analysis and summary. It seems inevitable that another crash will follow because they have done the same things – print money, insert into pet sectors and pass regulations that are sure to distort the markets even further. Can’t we just give peace a chance?!

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