Four years after President Obama's 2009 inauguration, the economic recovery is finally taking shape. The S&P 500, which had fallen 50 percent from its October 2007 peak when Obama first took the oath of office, is now up 80 percent and continues to reach historic highs. The unemployment rate, which hit 10 percent during the first months of the Obama presidency, has fallen to 7.8 percent. And job losses, which approached 200,000 a week in early 2009, are being slowly offset by 34 consecutive months of private sector job growth and counting.
Other recent economic indicators are also positive. Initial claims, which measures the number of Americans first applying for unemployment benefits, fell to a five-year low of 330,000 today; the lowest level since January 2008. That number is comparable to the recession peaks of the early 1990s and 2000s—a solemn reminder that elevated unemployment remains near crisis levels—but is well below the 667,000 unemployment claims filed in March 2009 at the height of the Great Recession.
Of course, not all jobs are created equal. A closer look at the employment data reveals many of the newly reemployed have had no choice but to accept part-time jobs with lower wages and fewer benefits. Currently, 7.9 million Americans report working part-time for “economic reasons,” meaning they were unable to find a better-paying, full-time job. This shift to a low-cost, more “flexible” workforce has been a boon to corporations—which have seen profits skyrocket in the last two years—at the expense of workers.
Better news is to be found in the housing market, which has rebounded significantly in the four years since President Obama began his first term. Construction of new privately-owned housing units reached the highest level in four-and-a-half years in December, and is expected to rise further in 2013.
Although real estate prices, homeownership levels and construction sector employment remain far below historical norms, this gap also suggests that the housing sector—traditionally a major driver of economic growth—has plenty of room to grow as the market recovery accelerates.
Perhaps most importantly for the Obama administration going forward are low interest rates and negligible inflation, which are in many ways an economic mandate to continue monetary expansion and push for renewed fiscal stimulus. This should be uncontroversial, as efforts by the Federal Reserve to lower long-term interest rates has neither overheated the economy nor undermined bondholders' faith in the nation's solvency.
On the contrary, interest rates continue to hover near the “zero lower bound,” indicating that U.S. debt remains one of the safest assets anywhere in the world. That means there will never be a better time to borrow money for necessary long-term investments in infrastructure and human capital—if Congress can be convinced.