When President Obama first took the oath of office seven years ago this month, the U.S. economy was so battered that many economists were pondering the possibility of another Great Depression.
The fears were real: Employers were cutting 796,000 jobs; the auto industry was facing bankruptcy; private foreclosures and public debts were soaring.
So the new president’s rhetoric was somber. For millions of Americans, “the state of our economy is a concern that rises above all others, and rightly so,” Obama said in his first address to a joint session of Congress. “It’s the worry you wake up with and the source of sleepless nights.”
Today, the U.S. economy is in far better shape — a message Obama will underscore Tuesday in his State of the Union address. He’ll have plenty of upbeat talking points to mention. For example, last month, employers added 292,000 workers and the jobless rate held steady at 5 percent, down from 2009’s peak of 10 percent.
Compared with January 2009, these are far better days for both workers and business owners.
Still, serious challenges remain, and critics will have plenty of problems to point out.
Here’s a quick look at the state of the economy as Obama enters the final year of his presidency. First, the good news:
- Jobs: In the winter of 2009, employers were announcing mass layoffs that did not peak until March 2009, when the country lost 824,000 jobs. That dynamic has turned around, following a record-breaking 70 consecutive months of private sector job growth. Over just the past two years, employers have added nearly 6 million jobs — the strongest pace since the late 1990s.
- Autos: In January 2009, new-vehicle sales plunged, falling 55 percent at Chrysler, and by nearly 50 percent at GM. Ford was down by 40 percent. Chrysler and GM had to borrow $13.4 billion from the U.S. Treasury to dodge bankruptcy. Today, the industry is booming. In 2015, U.S. sales hit 17.47 million vehicles, breaking old the record of 17.41 million, set in 2000.
- Stocks: In early 2009, stocks were taking frightful plunges. The Dow Jones industrial average hit a bottom of 6,507 by March. Once a turnaround began, prices soared. Over the past year, prices have fallen back amid worries about global slowing, but still, the DJIA is above 16,300.
- Foreclosures: In 2009, about 2.82 million properties filed for foreclosure. Today, foreclosure filings have fallen to near a 10-year low. As of November 2015, fewer than 700,000 properties were still in the nation’s foreclosure inventory.
- Low inflation: Throughout the recovery, consumers have seen relatively little inflation. In fact, over the past 12 months, the consumer price index has risen only 0.5 percent, which has in turn helped keep interest rates at historic lows.
- Gas prices: In the summer of 2008, gasoline was selling above $4 a gallon as the national average. When the economy plunged, so did the price of gas, down to around $1.60 in January 2009. Today, gas is averaging $1.96, according to AAA, the auto club. After adjusting for inflation, the current price is just slightly higher than in 2009 — but without the drama of a domestic demand collapse.
And here are some of the still-unsolved problems:
- Soaring federal debt: When Obama took office, the national debt stood at $10.6 trillion. Today, it’s nearly $19 trillion. By the time he leaves office, the debt will have nearly doubled on his watch.
- Stagnant wages: In the winter of 2009, average hourly earnings were around $22. Now they are about $25.24. After adjusting for inflation, workers have seen their buying power rise by less than a dollar, even though corporate profits have soared.
- Tax code mess: Virtually everyone in Washington, including Obama, says the tax code is far too complicated. Yet there appears to be no real hope that the White House can get Congress to reform it.
- Skills gap and student debt: Many employers say jobs are going begging, but workers lack the skills to fill them. The mismatch between skills and job openings is becoming a major barrier to growth, with more than 5 million jobs going unfilled today. At the same time, Americans are carrying about $1.3 trillion in student debt, far more than anytime in history.