Crisis Over? Careful— Those Cries of Victory Could Be Misplaced

“The worst may be behind us.” Though it was conditional, the key phrase in Barack Obama’s brief address this Friday already sounds like a declaration of victory. Delighted that in July the increase in the unemployment rate was lower than the previous month’s for the first time since the beginning of the recession in November of 2008, the American president rushed to give credit to his administration for this apparent sign of the recession’s end.

This rush to claim victory merits two serious warnings. First, from a purely American perspective, Barack Obama is at the first crucial moment of his term. His drop in popularity, which is only normal, given the enormity of the difficulties he has had to face, reveals a phenomenon particular to this president: part of the electorate is beginning to doubt his ability to deliver results in proportion to the gigantic hope that he brought to the White House.

That’s the reason Obama jumped at the first sign of a reverse in economic trends, to communicate that victory is just around the corner. Rebuilding his public support, without which he will not be able to make his big reforms a reality, is, in political terms, crucial.

From a world perspective, and more particularly from our perspective here, the powers that be would do well not to draw inspiration from the dangerous example just sketched out by the American president. Obviously, all we can do is hope that the signs on the other side of the Atlantic are good ones. But even supposing that this is the case, we should think long and hard about what the crisis has taught us. Our models of economic growth should be seriously revised; our financial markets should be brought back to their largely forgotten economic usefulness. And in Europe in particular, the natural rates of growth that we can reasonably expect will fall short of meeting our growing social and demographic needs. From this perspective, it would be very ill-advised to claim victory at the first faint sign of recovery.