On the 17 February 2009, President Barack Obama muttered the now infamous words “today doesn’t mark the end of our economic problems but it does mark the beginning of the end”. For years, many believed that such an announcement appeared to be a false dawn but now, 5 years since signing the American Recovery and Reinvestment Act, America has recovered from its depression-level free fall, stabilising the economy as a whole.
Dragging the Economy From the Doldrums
Although at the time the bill passed, the American economy was haemorrhaging 800,000 jobs every month while contracting at an annual rate of 8%, its impact at the time was limited and, as a direct result, a greater number of Americans believed that Elvis was still alive than believed that the Recovery and Reinvestment Act created jobs.
It was not until 2010 that the stimulus measures became effective. Mocked by both left and right, the acts inability to stem the woes pre-2010 looked as though it may derail Obama’s premiership, but now, only four years later, it looks to have been the cornerstone to America’s economic recovery. As the Presidential election begins to loom large, many feel that the recovery has come too late to bolster Mr Obama’s place in the pantheon of history but, with Republicans being staunchly opposed to a stimulus package at the time, and after being so callous in their opinions of it while it was failing, it could be the piece of legislation that returns the Democrats to office in 2016. For Mr Obama, that may be enough of a legacy to leave.
Contrast Between Obama’s Presidential Terms
Unsurprisingly then, considering this reversal of fortune, the White house are keen to stress the contrast between President Obama’s first term and his second. The White House’s central argument remains that stimulus meant that America was saved from a double-dip recession due to job creation figures that added to overall GDP growth over the period.
This, however, remains disputable, with Republicans continuing to argue that other factors initiated such a bounce and that the time delay between the legislation being passed and the bounce created shows that its impact was limited. Either way, no matter how the facts are presented, it appears as though it could form a key cornerstone of the Presidential race.
Immediate Impacts on the U.S. Economy
For now at least, the economy looks bullish and it has shown reasonable momentum in 2014 thus far. In the final quarter of 2013, the economy grew by 3.2 percent, echoing the 4.1 percent growth we saw in the summer of 2013.
At present, however, although the figures for the 4th quarter of 2013 remain strong, market volatility continues to hamper American investment and economic output. China in particular has seen weak data releases and, as a result, investors are wary of market changes. If you’re interested in trading from the strength of the U.S. economy, you need to make sure you use an Mt4 broker that allows you to make informed decisions.
2014 looks like it could be a bullish year for the American economy thanks to the impacts of the Recovery and Reinvestment Act’s long term impacts. However, if you’re trading, beware of market volatility.