Economy in Bush years falls short of predecessors in nearly every way

It was a time of low inflation, the lowest overall rate for any president since John F. Kennedy.

Other than that, the economic record of President Bush was largely a disappointing one. During his administration, the country grew at the slowest overall pace of any recent president, whether measured in gross domestic product (GDP) or employment. The last president to preside while the stock market did worse was Herbert Hoover.

Economic performance was good for much of the middle years of Bush's eight-year term, but it began and ended with recessions.

Some of the disappointment with Bush may stem from the fact he took office at the end of a huge boom, in the economy and the stock market.

"No matter who took office in 2001, they were destined to oversee dashed expectations regarding the economy, the markets and the geopolitical outlook," said Robert Barbera, chief economist of ITG, a brokerage and technology firm. "It was all captured in the lunacy of the $5 trillion surplus on the horizon. That vision required no wars, no recessions and a nonstop spectacular bull market for equities.

"That said, it certainly did not have to come to this."

During President Clinton's administration, the number of jobs created was greater than the growth in the population of working-age Americans, something that had happened in only one previous administration since World War II, that of Lyndon Johnson. Job growth also sputtered after Johnson left office.

Bush's administration was marked by a recession that began two months after he took office and another downturn in his final year of office. In the end, the economy during his term added enough jobs to employ only 14 percent of the added number of working-age Americans, the lowest proportion of any postwar administration.

Employment grew at a compound annual rate of only 0.3 percent, half the 0.6 percent rate that his father had recorded in what had previously been the worst post-World War II performance.

The GDP rose at a compound annual rate of just 2 percent during the younger Bush's administration, the lowest of any postwar presidency. But on a per-capita basis, the 1 percent annual gain was a little better than during the administrations of his father or of Dwight Eisenhower.

Those figures are likely to change, at least a little. They assume that the consensus forecast of economists surveyed by Bloomberg, of a fourth-quarter GDP decline at an annual rate of 5 percent, will be correct. That figure will be reported on a preliminary basis next week and revised in later months as more data become available. The employment figures also will be revised.

One set of numbers that will not change is that of the stock market. The Standard & Poor's 500-stock index fell at an annual rate of 5.6 percent during the Bush years, exceeding the 4 percent decline during the administration of Richard Nixon. It did not, however, come close to the 31 percent rate of decline during the term of Hoover.

On the brighter side, the consumer price index (CPI) climbed an average of only 2.4 percent a year, down from the 2.6 percent posted in the Clinton years.

That low inflation was a mixed blessing for the administration's record, as the national debt rose to 75 percent of GDP. Had there been more inflation — and consequently a higher nominal GDP — the gain would have been smaller despite the large budget deficits.

Barack Obama enters office with expectations almost the mirror opposite of those faced by Bush eight years ago. Share prices are depressed, the economy is shrinking and trillion-dollar budget deficits are expected.

If it was virtually impossible for Bush to exceed the high expectations that prevailed in 2000, it may be much easier for Obama to see the economy get better on his watch.