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Obama bets his future on a tenuous recovery

If voters are assessing President Obama based on their job prospects – well, he asked for it. In a Jan. 15, 2009, meeting with the Washington Post, Obama told us how he should be judged four years later: “Have we created jobs that get the economy back on track, businesses investing again, people feel some confidence, that we’re on the move? That is my No. 1 priority.”

Friday’s employment report gave Obama a reason to crow. Having hit a high of 10 percent in October 2009, the jobless rate fell in September to 7.8 percent, the level it was when Obama took office amid a historic wave of job losses. More important, it fell even as the labor force grew; previous rate declines partly reflected worker discouragement. The percentage of adults with a job rose from 58.3 percent to 58.7 percent, wages by 0.3 percent.

This is not small progress, considering the depths of the recession with which Obama was confronted and considering that no president can fix, or ruin, the U.S. economy by himself – let alone the global economy upon which the United States depends. Unemployment probably would have been worse but for some of Obama’s policies, such as the financial-sector rescue, a government-funded auto industry restructuring and, yes, many elements of the $814 billion stimulus package. That’s a fact, even if only the auto bailout is popular enough for Obama to tout in the campaign.

Yet some of what went right began even before Obama took office: President George W. Bush got the $700 billion financial bailout fund through Congress in 2008, then used it to keep General Motors and Chrysler alive through Inauguration Day. The Federal Reserve’s monetary policies, too, have propped up the economy; Chairman Ben Bernanke recently claimed that the Fed’s actions alone saved 2 million jobs.

Obama’s more targeted strategies, notably the subsidized loans for green energy and various mortgage-relief efforts, have not always panned out. Meanwhile, the fracking revolution in oil and gas created thousands of jobs, which Obama had little or nothing to do with.

All told, the economy has restored 3.2 million of the 8 million jobs it shed between December 2007, when the recession began, and June 2009, when it ended. Bernanke used the words “grave concern” to describe the jobs outlook just two weeks ago, and Friday’s report does not necessarily refute him. Neither investment nor business confidence – Obama’s other two benchmarks – have fully rebounded. The former remains about $100 billion below its pre-recession quarterly peak of $1.7 trillion and has been decelerating for the last year; the latter, as measured by the Purchasing Managers Index, is higher than it was in January 2009 but has been trending downward for the past six months.

Businesses’ risk aversion is partly due to Washington gridlock and the impending fiscal cliff it has produced. Obama deserves his portion of blame, as do the Republicans who would oust him. But election-year angst aside, the United States experienced an epochal financial crisis in 2008, and recovery from a post-financial-crisis recession takes time, perhaps more than one presidential term. Banks are still healing, industry is still restructuring and households are still deleveraging.

Is the U.S. economy “on the move,” as Obama wanted? Yes, but slowly, slowly – and there’s no guarantee it won’t stall again, no matter who wins in November.