Fox News host Jon Scott disputed President Clinton's claim that no one could have turned the 2008 economy around in four years with a dishonest use of statistics and a faulty comparison to the Reagan economy.
On Happening Now, Scott showed part of Clinton's speech at the Democratic National Convention in which Clinton said that no president “could have fully repaired all the damage that [President Obama] found in just four years.”
Scott then claimed that when President Reagan took office, unemployment was 8.2 percent, and by the time his first term ended, it had dropped to 6 percent. Scott concluded, “Clearly there are presidents who have faced challenges at least as great as those faced by President Obama.”
During the segment, the following graphic aired:
In reality, the numbers Scott used are not from Reagan's first term -- they cover Reagan's entire eight-year presidency. The Bureau of Labor Statistics (BLS) shows that the unemployment rate that Fox used was 8.2 percent in January 1981, but wasn't 6.0 percent until January 1989. In July 1984, which would correspond to the last month available for Obama's presidency, the rate was 7.5 percent, after declining from a high of 11.4 percent.
But Fox's problems with the data don't end there. Fox used employment data that are not seasonally adjusted. As the BLS points out, the adjusted numbers are the ones that are widely reported, because they avoid major fluctuations based on seasonal events such as weather and holidays. In fact, Fox itself normally uses the seasonally adjusted numbers to report on Obama's economic record, including in another dishonest graphic it aired last December.
This is significant is because Fox's claim is entirely dependent on using the unadjusted numbers. An honest discussion of employment numbers under Reagan and Obama would compare seasonally adjusted data from January 1981-July 1984 with January 2009-July 2012, which show that the rate under Reagan stayed the same, while the rate under Obama was higher by 0.5 percent:
One contributing factor to the discrepancy is that the recession Obama faced was far more severe than the one Reagan faced.
The Congressional Budget Office explained that Reagan's recession was caused by an effort to reduce inflation, which allowed Reagan to begin a recovery by lowering interest rates, a solution that is not possible now due to rates that are already near zero.
Further, the recession faced by President Obama was caused by a financial crisis, not a monetary adjustment. As several economists have noted, recessions associated with financial crises are more severe and hamper recovery far more than other kinds of economic downturns. Writing for Bloomberg View, economists Carmen Reinhart and Kenneth Rogoff explained:
After a normal recession (which for the average post-World War II experience in the U.S. lasted less than a year), the economy quickly snaps back; within a year or two, it not only recovers lost ground but also returns to trend.
After systemic financial crises, however, economies of the postwar era have needed an average of four and half years just to reach the same per capita gross domestic product they had when the crisis started. We find that, on average, unemployment rates take a similar time frame to hit bottom and housing prices take even longer. With the Great Depression of the 1930s, economies on average needed more than a full decade to regain the initial per capita GDP.