Here's What's Really Happened To The Private Sector Under Obama

barack obama aeroplane

Photo: The White House, Flickr

So Obama made a pretty big “gaffe.” He said that the private sector was doing “fine.”Here’s the full quote, via WSJ:

“The truth of the matter is that … we’ve created 4.3 million jobs over the last 27 months, over 800,000 just this year alone … The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government,” which, he said, isn’t getting the support it needs from Washington.

Given that unemployment is over 8 per cent, and Q2 GDP is tracking at less than 2 per cent, saying that any part of the economy is “fine” looks wildly out of touch, and Republicans are lambasting him for it.

Obama has already backtracked, but is what he said true?

Let’s go to the charts!

First, here are corporate profits after tax. They've gone parabolic and never been higher.

And if you look at corporate profits as a share of total GDP, we're at another brand new record.

In addition to corporations, landlords are doing amazingly. Look what's happening with rental income!

So corporations are making all this money. But are they investing? That's been coming back nicely.

And if you look at equipment and software investment, that's at all-time highs.

What about hiring? It's true that private sector employment is still well off its old highs.

However, the private sector has been adding jobs steadily since the end of Obama's first year, and today there are more private sector jobs than there were before Obama took office.

The bottom line: It would be great if the public sector were stronger, but things are going up and to the right in these charts. Now what about the other half of Obama's statement: the public sector?

To start, total government employment is far below where it was when Obama started office.

If you exclude Federal Government workers, then the decline in public sector employment is even more severe. This chart represents state and local employment.

A big contributor to the decline in local employment: education workers.

Why is employment going down? Because state and local government spending growth has hit its lowest level ever.

During the crisis, the state & local pain was mitigated by aid from the Federal Government, but that has since dropped off dramatically.

The decline in the public sector is more than just lost government workers. School construction spending is on the decline.

Spending on roads has generally gone down under Obama.

Here's public construction spending on the water supply. It's sharply lower since the crisis.

Public sector spending on public safety has COLLAPSED under Obama.

Overall: The post crisis public construction collapse is like nothing seen before in this chart.

So Obama is right. Every private sector chart we looked at went up and to the right, like this one.

And just about every public sector chart we looked at went down, like this one of state and local employment.

Thus it stands to reason that if we hadn't fired all those teachers...

And hadn't laid off all of those construction workers...

The economy would be doing MUCH better today.

Now for more on Obama's record...

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.