Recession

When President Obama took office, he said the economy was the worst since the Great Depression. A year later he said it was worse than he thought. The recession of the early 80’s was statistically worse. In that recession inflation was 13%, interest rates were 21%, home mortgage rates were 16%, unemployment was 10.8. In the recent recession, unemployment reached 10.1% but interest rates have been zero and home mortgage rates under 4% and inflation is less than 3%. After two and one half years the Reagan recovery had created 7.5 million jobs and since Obama took office 1.4 million jobs have been created and since the low point of the recession 2.6 million. At that time in the Reagan recovery, disposable income rose 5.4% but under Obama it has only risen 0.8%. Within two years the unemployment rate had decreased from a high of 10.8% to 7.4%. This is why many today, say that the way out of a recession is through the private sector and that government cannot spend its way out of a recession.
The difference was that Reagan clamped down on inflation and it was a very difficult two years but then the economy took off. With Obama he has tried to soften the blow by government spending and it has caused the economy to follow a path of slow recovery.
No two recessions are alike but we can infer from this data that maybe allowing the economy to sink on its own might have caused the recovery to be stronger but that is only inference.
I bring this up only because we are facing a similar situation with housing. Some say that Obama’s attempt at softening the blow is slowing the recovery. They say it is best to let the market run its course. It could be that Obamas core belief that government can solve problems won’t allow him to let the market decide. Perhaps he feels that he would appear heartless if he just stood by and let market forces work.