State of the Union: Familiar economic themes

President Barack Obama gestures while giving his State of the Union address during a joint session of Congress on Capitol Hill in Washington, Tuesday, Feb. 12, 2013. / Alex Wong/Getty Images

(MoneyWatch) President Obama's State of the Union address was as expected: part celebration of how far the nation has come from the dark days of the financial crisis; part pipe dream for government action to boost the economy further and to create more jobs; and part stump speech-cheerleading around debt reduction.

The situation has vastly improved from four years ago, when the financial system was still skating on thin ice and the economy was hemorrhaging jobs during the worst recession since the Great Depression.

CBS/AP

When the president delivered his first address to Congress in 2009, the recession was a year old and the economy had just come off the worst quarterly contraction (-8.9 percent) since 1950. For all of 2008, the economy shrunk by 0.3 percent, while in 2012, the economy grew by 2.2 percent. Improvement, yes, but there's no escaping that the current level of growth is sub-par and well-below the average annual growth rate of 3 to 3.5 percent seen over the past 60 years.

The employment situation was dire in 2009, as job losses totaled a staggering 794,000 in January alone. (The U.S. economy lost 4.5 million jobs from November 2008 through April 2009.) Don't be fooled by the unemployment rate then - while it was a tenth lower than it is currently, it was going in the wrong direction--on the way to 10 percent later in 2009.

In his speech, even the president acknowledged that while the economy is adding jobs "too many people still can't find full-time employment."

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State of the Union address 2013

You can say that again: a staggering 12.3 million Americans are out of work and of those, 4.7 million have been unemployed for more than 6 months. As a result of the continued difficult labor market, incomes remain under pressure, with income growth idling at only 1.5 percent.

Two measures that might have seemed like positives, inflation and gas prices, were a direct result of the recession. In fact, four years ago, the Federal Reserve was more concerned about persistent deflation than inflation. Inflation is still remarkably low, considering that the Federal Reserve has been buying trillions of dollars of bonds over the past four years.

Three metrics by which the economy has drastically improved are home prices, auto sales and stock prices. But all three have come from incredibly low levels, which can distort where things stand. In the 12 months ended January 2009, home prices were down 19 percent. Prices kept falling - eventually by a third, before bottoming in March 2012. When adjusted for inflation, house prices are stuck at late 1999 to 2000 levels.

Auto sales, which were at a 26-year low in 2009, have recovered to annual pace of 15.3 million, but are still well-below the peak level of over 20 million in July 2005. And then there's the stock market, which has risen by 90 percent from four years ago. But many investors, who were too scared to stay invested, realized losses and never got back into to enjoy the recovery.

What have you done for me lately?

OK, so we all understand that the country is better shape than four years ago, but what will propel the economy now and create new jobs? Mr. Obama introduced initiatives in manufacturing, energy, infrastructure, and housing. The "Fix-It-First" program, would "put people to work as soon as possible on our most urgent repairs", and the public-private "Partnership to Rebuild America," hopes to attract private capital to "upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children."

Does some of this sound familiar? In 2011's State of the Union, the president said, "We'll put more Americans to work repairing crumbling roads and bridges. We'll make sure this is fully paid for, attract private investment, and pick projects based [on] what's best for the economy, not politicians."

Or in the 2012 State of the Union, Obama noted, "So much of America needs to be rebuilt. We've got crumbling roads and bridges; a power grid that wastes too much energy; an incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world."

And who doesn't want to educate our kids? In 2011: "If we want innovation to produce jobs in America and not overseas -- then we also have to win the race to educate our kids."

In 2012: "To prepare for the jobs of tomorrow, our commitment to skills and education has to start earlier."

In 2013: "Let's do what works, and make sure none of our children start the race of life already behind. Let's give our kids that chance."

The economy is expected to grow with no spending (largely because of the Fed's easy money). The deficit is also shrinking with no spending (at least for a few year, according to CBO), which in theory should put out the fire to dial back outlays.

Maybe third time will be a charm with all of these ideas. But most of the proposals outlined that might help the economy or create jobs would require the government to spend money right now. That seems highly unlikely, when in less than three weeks, the government will be forced to cut $85 billion dollars worth of spending, known as "the sequester." Ironically, as the president discussed job creation, the Pentagon and non-defense government agencies are readying their plans to comply with the law and cut expenses and jobs.

The president warned that the cuts "would certainly slow our recovery, and cost us hundreds of thousands of jobs," a fact with which most economists agree. The Congressional Budget Office determined that the sequester would likely shave 0.5 percent from the 2 - 2.5 percent growth expected in 2013. 

In the deficit arena, there has been progress. "Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion," and doing the math, "we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances." Some economists suggest that the economy has been able to grow despite deficit reduction measures and without these headwinds, the economy would be doing even better.

Happily, Mr. Obama did talk briefly about the elephant in the room: skyrocketing health care costs. But the solution is not so easy. The president said that "we can't ask senior citizens and working families to shoulder the entire burden of deficit reduction while asking nothing more from the wealthiest and most powerful." The battle over future deficit reduction will center on this delicate and politically-heated balance between cutting benefits of the masses versus increasing taxes further.

And yes, the president finished the speech with pom-poms in hand.

"We are citizens. It's a word that doesn't just describe our nationality or legal status. It describes the way we're made. It describes what we believe. It captures the enduring idea that this country only works when we accept certain obligations to one another and to future generations; that our rights are wrapped up in the rights of others; and that well into our third century as a nation, it remains the task of us all, as citizens of these United States, to be the authors of the next great chapter in our American story."

[Hoochie_Coochie_Man]

Familiar Themes?
Quit beating around the bush CBS News.
Just say it was the tired old Obama BS we have heard for 4 years now and nothing ever comes of his so called "Themes".
You have to be a real idiot and fool to believe anything he says at this juncture.
What a waste of the American peoples time last night was.
Another hour+ off our lives we will never get back.

[qsmco12]

I am disappointed, disillusioned and disgusted. I'm tired of the inaction of the congress and our Commander in Chief. I had high hopes that Obama could bring people together, but clearly we've only become more divided as a nation. I'm tired of the promises of the Republicans and the Democrats, the dance is over. Next time, I'll vote for a 3rd party, no matter who it is. Can't be worse than this.

[bobw101]

Why even play their game, why vote?

[gork_platter]

"Happily, Mr. Obama did talk briefly about the elephant in the room: skyrocketing health care costs. But the solution is not so easy."

Actually, anyone in the business of news, should have already read the CBO report from last week, showing that Medicare and Medicaid spending has slowed considerably, in part, because of Obamacare. Shock, I know, because you know, most Americans who are against it, haven't actually bothered to read about what's in it.

Count me as disappointed that mainstream media continually repeats fallacies.

[Merlinsscience]

No gork, you have misinterpreted the facts and are misrepresenting them here. Those aren't decreases in spending, those are reductions being used by Obamacare. Those are reductions in payments. What's more likely: everyone else is wrong or you have made a mistake?

[neokewl]

I am not sure if I will buy these stats given out. For starters the unemployment rate is the U3 rate which is counted as the number looking for work in the last 4 weeks. If one looks @ broader scale unemployment numbers ( U6) its closer to 14 %. Again the inflation numbers is questionable. I dont think it reflects much on the reality. College education costs have increased. Health insurance increased. If this is an economic recovery, then i fear the worse when they probably have to declare the recession officially.

[yonexsp]

Gas was $4.05 in early July 2008. So the gas price snapshot for one month is meaningless. Up and Down, regardless of who is power

[Merlinsscience]

True... Gas prices are no indicator at all for a presidency. Unless that president actually did something to makes the prices change... This president has done nothing, at all, so he's off the hook on gas prices. Healthcare, however, is a different story...

[ClemKadoodlehopper]

Another year, another hour gone. You would think a graduate of Harvard Law School would realize the likelihood of getting "Additional" spending passed would be zero. Then you hear the argument, Siemens will move hundreds more jobs here if we improve the infrastructure. For the love of God, Don't these people ever look at cost balance sheets? Getting Siemens to move hundreds of jobs here for billions of dollars isn't cost effective. We need to take this opportunity to make military service mandatory. Use those personnel and supplies to work on the infrastructure, as well as training. Then, 40 years from now, when our population is healthy, homogeneous, and educated, we'll look back and say, "This was when we took charge of our future!"

[yonexsp]

This i 2013 right, just had to check there with the Military service solution comment. Why do Americans always think the Army is the solution to everything.

[Merlinsscience]

Yonexsp- because Americans have become lazy elitists who forget what it means to actually serve their country. They love to take full advantage of freedom, liberty and the pursuit of happiness- but unwilling to sacrifice anything for it. I'm not saying that everyone should be compelled to compulsory military service, per sey, but some form of service is warranted. Watching these blogs, I can see just how pathetic so many of our "intelligent" citizens have become.

[Merlinsscience]

It was more of the same and to say otherwise is merely ignoring the fact that everything he has said before is written down; go read. Raise minimum wage, said it every year since 2007. Rebuild infrastructure, said it every year since 2008. Raise taxes on wealthy, said every year since 2005. Gotta build better education, same as above. How much of the aforementioned has he actually done? None. Strange how is was so silent about the OMB and CBO numbers that came out claiming is namesake health plan is already over budget and that it is causing insurance prices to sky rocket. Even stranger was his silence about the "family plan" budget busting price tag in Obama care that the actuaries just announced...

More rhetoric we can all count on, to go nowhere.

[igity]

I was hoping for one of those historic speeches like the one Mandela gave to congress or the I have a dream speech by Dr. King, I was hoping to feel those GOOSE BUMPS up and down my spine and radiating through every limb. In that respect Obama's speech fell flat but what he delivered was so much more than spine tingling. He brought the audience to tears. Never in my life have I witnessed such a powerful address. Not only did he give Congress a blueprint for fixing most of what ails us all as Americans and World Citizens, he played our heartstrings like a virtuoso. God Blessed You Obama and may he bless these United States and the rest of this planet we live on.

[Bojax39]

A good speech writer and a folksy manner do not solutions make.

Rhetoric, no matter how well delivered, never solves problems. A fact which nobody in congress or the Obama administration seems to realize.