Economic Dynamics

* The Republican propaganda machine has spent much of every day and night for three years blaming Obama for the slow economic recovery. I would argue that presidents deserve little praise or blame for economic swings during their terms. In case of the latest downturn, conventional tools for economic stimulation had been spent before Obama's tenure.
* Time courses of several economic swings are beautifully illustrated in a couple of graphs published on the web by Bill McBride. Seen in his graphs, the Great Depression was by far the deepest and longest period of job loss. Downturns between 1948 and 1980 were rather short lived. Then each subsequent downturn (1981, 1990, 2001 and 2007) was longer than the previous one. The first three of these were shallow, reflecting the responsiveness of economic activity to reductions of Federal Reserve interest rates. We grew complacent with the apparent ability of the Fed to prevent large recessions.
* Then came the catastrophic recession of 2007, which involved several bank failures. After several desperate actions to stop the bleeding, employment slowly improved and continued improving slowly until the present.
* The slowness of employment recovery in the present recession is due primarily to two facts: 1) Interest rates were already so low that lowering them had little effect, and 2) Businesses won't borrow to expand with fewer than normal customers and orders. In other words, economic actors weren't in a position to respond to a push from slightly easier borrowing. The economy hasn't been capital limited for decades.
* There is reason to fear an interruption of our slow recover, ie a second dip. This is due to imbalance among European countries, who are experiencing bail-out fatigue, and to maturing of the Chinese economy, which can't go on with infrastructure projects forever.
* Most of these factors are out of the president's control. However, there are outside-the-box policies that could get our economy back to a satisfactory steady state.