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President Obama’s historic first term is drawing to a close with elections due in November 2012. Achievements include his healthcare bill and further progress towards nuclear non-proliferation. However, Obama has struggled to improve the US economy and government finances, owing to the impact of the 2008 financial crisis, and unemployment remains high.
In January 2009, Obama became the first person of African-American descent to come to power, making his presidency an historic one from the onset;
As head of the world’s largest economy (US GDP stood at US$15.1 trillion in 2011, comprising 21.4% of the world’s total GDP), Obama’s achievements and failures are of significant importance to the global economy;
Obama became President at the height of the global economic downturn. His main achievements have been the implementation of his March 2010 healthcare bill, which has benefitted consumers, and the facilitation of emergency loans to the American automotive industry in 2008. Yet the US unemployment rate has risen from 5.8% of the economically active population in 2008 to 9.0% in 2011, while public debt has risen from 71.6% of total US GDP in 2008 to 100% in 2011.
The USA’s political and economic strength is often regarded as a barometer for peaceful and prosperous times:
After inheriting economic chaos post the global financial crisis of 2008, when real GDP growth decreased by 0.3% in the USA, the President has struggled to engender economic progress. US real GDP contracted further by 3.5% in 2009, growing to 3.0% in 2010 as a result of recovery from the US recession, but slowed to 1.5% in 2011 as US export growth slowed due to weakened global demand;
Obama has failed to reduce the unemployment rate during his Presidency. In 2008 the unemployment rate was 5.8% of the economically active population, rising to 9.0% in 2011. Part of the reason for this was that in autumn 2011, the Republicans blocked Obama’s American Jobs Act, designed to bolster employment through infrastructure spending, tax cuts and incentives. Obama did however facilitate emergency loans to the US automotive industry in 2008 and extended unemployment insurance in 2011. Such measures helped to increase per capita consumer expenditure to US$33,830 in 2011, up from US$32,299 in 2010;
US Real GDP Growth and Unemployment Rate: 2006 – 2011
Source: Euromonitor International from International Monetary Fund (IMF), International Financial Statistics, World Economic Outlook/UN/National statistics and International Labour Organisation
In February 2009, the US government injected US$787 billion into the economy to try to stimulate growth. This increased the general government budget deficit to 12.8% of total US GDP in 2009. The deficit has remained high, at 9.6% of total GDP in 2011, with public debt at 100% of total US GDP in 2011, up from 71.6% in 2008;
US Public Debt and General Government Budget Deficit: 2006 – 2011
Source: Euromonitor International from International Monetary Fund (IMF), Eurostat, OECD and International Financial Statistics
Political posturing in summer 2011 over the question of raising the US debt ceiling brought havoc to the financial markets and the USA to the brink of default on its loan payments. Standard and Poor’s ratings agency lowered the USA’s AAA credit rating to AA+, which may raise both public and private debt servicing costs;
The New Start Treaty with Russia to advance nuclear non-proliferation was signed in 2010, a major foreign policy achievement. Obama was also credited with the assassination of Osama Bin Laden and the withdrawal of US troops from Iraq in 2011. However, violence continues in Iraq and the USA is still embroiled in Afghanistan, while tensions remain with Iran. The president has also achieved little to progress the Palestinian question, and despite his promise to close the controversial Guantanamo Bay detention facility in Cuba, it still remains open.
There are signs of economic improvement, which is advantageous to Obama in the 2012 Presidential Elections campaign. Figures from the US Bureau of Labor Statistics showed that the US economy added 200,000 new jobs in December 2011, but the recovery still is tentative. Real GDP is expected to grow by 1.8% in 2012. Consumer confidence also improved in December 2011;
Obama’s prospects for re-election were bolstered in November 2011 when the Tea Party movement, the Republican Party’s ultra-right wing, suffered defeats in State-level elections. He has also been wooing Hispanic and Latino voters, a growing proportion of the US population, and in January 2012 pledged to create jobs and improve infrastructure by increasing taxes on high net worth individuals to at least 30.0% of their total income;
The greatest gauge of the President’s success or failure will come with the outcome of the US Presidential Elections in November 2012. According to industry sources, Obama’s approval ratings for January 2012 were lower than average for the duration of his presidency. However the Republican race is too close to call, with Mitt Romney and Newt Gingrich bidding for the candidacy. Split loyalties amongst Republicans could improve President Obama’s re-election hopes.