It's surprising the U.S. economy is doing as well as it is.
Last week the Department of Labor reported that the jobless rate had dropped to 7.8 percent, finally dipping below the symbolically important 8 percent mark and matching the level when President Obama took office in the grips of a deepening Great Recession. Significantly, the labor department attributed the unemployment drop to job creation, rather than people giving up on finding employment.
Since the job market hit bottom in February 2010, the U.S. economy has seen an increase of more than 4.3 million jobs, with the nation's employers adding an average of 146,000 jobs per month this year. And while it is true this has been the slowest post-recession recovery since the Great Depression, it is also true the recession this recovery followed was the worst since that epic economic collapse.
Slow as it may be, the recovery has continued in the face of some difficult headwinds. Global economic growth is now at its slowest pace since the worldwide recession in 2008-2009. Major economies continue to sputter. Japan's economy is moving in reverse. China's economic growth of about 7 percent would be good by most measures, but is a downturn from the double-digit expansion that economy experienced in recent years.
Meanwhile many European economies are again in recession. And support for dealing honestly with out-of-control deficits in some Euro-Zone countries is once more ebbing, with Spain stalling on its austerity commitments tied to a rescue package and Germany again sending mixed signals about its willingness to bail out neighbors.
Also confronting the U.S. economy is the looming fiscal cliff. Because of the political paralysis in Washington, the nation confronts at year's end a combination of large mandatory spending cuts, expiration of all the Bush-era tax cuts and the current president's payroll-tax holiday, plus a 30 percent cut in Medicare reimbursements to doctors. Collectively that would sap 5 percent of GDP, inviting another recession. Uncertainty over whether Congress can avert the cliff, and what a compromise might look like, has discouraged many businesses from hiring and lowered durable-goods orders.
No wonder, then, that U.S. manufacturing hemorrhaged nearly 50,000 jobs in August and September. Regardless of who becomes president it will be difficult to expand or even sustain the recovery if the global outlook continues to darken and the cliff cannot be averted.
For all the criticism that President Obama has mismanaged the economy, a new poll of nearly 400 academic and business economists by The Economist magazine found that about half rated his record on the economy as good or very good (compared with just 5 percent who said that about President Bush four years ago). And by a wide margin they rated his overall economic plan better than Republican challenger Mitt Romney's plan. Fifty percent of the experts said the president had a better grasp on economics, compared to 28 percent who felt that way about Mr. Romney. Another 22 percent found no difference.
This flies in the face of Mr. Romney's contention that his experience as a venture capitalist makes him better suited to direct the economy. But it appears many economists are unnerved by the recklessness and uncertainty of the Romney proposals. He would cut all tax rates by one-fifth, promising to eliminate loopholes to make up for the loss of tax revenue, but refusing to say what loopholes. The biggest losers would likely be the upper middle class, which would lose tax breaks but not experience the windfall seen by the very rich. Meanwhile the drastic cuts in domestic spending to make up for the tax cuts would slow and possibly stall the economy.
In the tradition of trickle down, Mr. Romney and Republicans say the big tax breaks will spur economic growth and benefit all, but the record for that approach is not a good one, income retrenchment for the middle class after the 2001 Bush tax cuts being a case in point.
Against an aggressive Mr. Romney, President Obama did a poor job in the Oct. 3 debate defending his economic policies and attacking his opponent's plan. He gets another opportunity Oct. 16. A second poor performance and Mr. Romney may very well get a chance to test his policies next January, and try to prove those economists wrong.