Monday, April 18, 2016

Presidential Economic Performance...By the Numbers

I was at a friends house this weekend and invariably the topic of the upcoming presidential election came up.  I have to be very clear, I'm quite agnostic (and cynical) regarding the whole process at this point.  Still, I was astounded by the misinformation and the amount of talking past one another taking place.  Thus, I thought I'd at least attempt to offer some simple perspective to gauge economic performance during different presidents terms (personally, I don't attribute much of the activity during a presidents term to the administration...much bigger pieces are at play than tax and fiscal policy).  Still, below are some simple metrics.

Please note, data below is from February 1 of each presidents inauguration through January 31 of term closure.  Obama figures are through January 31, 2017 premised on continued trend job and debt growth.

The first chart below shows growth of federal debt vs. growth of full time jobs during differing presidential terms.
  • Obama's administration will create nearly as much federal debt as the previous 7 presidents (Nixon through Bush II).  However, the massive debt increase saw creation in excess of 10 million full time jobs (double the debt growth but 20x's more FT jobs than during Bush II's administration).

The chart below is a simple division of FT job creation by federal debt growth. 
  • Obama's administration saw significant job growth (Obama's inauguration nearly bottom ticked the downturn in jobs & financial markets...both bottoming in March '09) but at a historically dear price of nearly $900k per new full time job created.
  • However, by this metric (and, IMO, many others), Bush II's performance is likely the worst in US history fighting multiple non-essential wars on "terror" while decreasing taxation against while ramping expenditures (this man is why Obama cannot claim the top spot in presidential infamy).

The chart below shows federal debt creation by presidential periods.
  • Obama's administration will be responsible for about 46% of all US Treasury debt creation in the nations history (about $9.3 T of the est. $20.2 T to exist by Jan 31, 2017).
  • The Bush administrations abysmal performance also stands out.

The last chart highlights the most disturbing trend, the growth in Treasury Marketable debt.  During previous administrations, particularly since the creation of the Social Security surplus used to purchase non-marketable US Treasury debt, up to half of all US debt was purchased via this surplus.  However, with the demographic shift of the baby boom, the surplus has nearly ceased and is likely to ultimately turn to a deficit.  This meant that nearly all federal debt issued during Obama's administration had to be sold in the open market (Marketable debt).  The flood of debt was purchased by two primary sources: Foreigners and the Federal Reserve.

For those interested in the story of who bought all that debt...please read Treasury Buying Mystery.  This is a story of the shift of Treasury buying from domestic to foreign to Federal Reserve to the last year during which an abandonment of all credible buyers has been accompanied by rates smoothly continuing ever lower (perfectly opposite the manner a "free market" would trade).  Truly a "mystery".
For those curious why the system is seemingly spiraling into insanity...please read Truth is the Only Topic Off Limits in this Election.  The article outlines the driver of economic deterioration, demographics, and the Fed (and central banks worldwide) attempt to maintain growth via interest rate cuts to incent greater debt from a flattening and shrinking core of consumers.

This is no way an attack on red team or blue team...from what I can tell, they are all on the same team, the green ($) team.  I'm not sure a vote for any of the mainstream candidates is warranted.  I'm also pretty confident even a "perfect" candidate would not be capable of even explaining why and /or initiating the truly necessary and painful restructuring necessary.  It's likely impossible, in a bought and paid for "democracy", to get the national acceptance for the national shared sacrifices that a quasi bankruptcy and restructuring would entail...despite this being the only real means to avoid a total financial, economic, and likely societal breakdown.
Best of luck to us all.