From the monthly archives:

September 2015

Secretly, every investment banker loves to debate poverty.  In one way or another, finance is intricately connected with various poverty policies.

Because of this, and given that presidential politics are soon to take over dinner tables, here’s a look at poverty by U.S. president.

Before diving in, which U.S. president would you guess is best at reducing poverty?  Which president is the worst?

The Number of Individuals in Poverty President

The following graphic captures the number of individuals in poverty by U.S. president.

A couple of notes of explanation. The vertical axis counts the number of actual individuals estimated to be living in poverty. The horizontal axis captures the number of months into a given presidency. Each colored line is a given presidential administration.  The line starts when a given president took office (end of January following an election win).

Take one more guess before seeing the results.  Which president is the best “poverty fighter?”  Which president is the worst?

Surprisingly, although contrary to his political message, the worst U.S. president for poverty is President Obama. During Obama’s time in office, the number of individuals living in poverty is up a little over 2 million.

On the other end, the best U.S. president is Nixon.  During his administration, the number of individuals living in poverty declined by a little over 1 million.

Poverty by U.S. President

The figures are, of course, on an absolute basis, which may put more recent presidents on top because of population growth.  The next section looks at the poverty rate.

Presidential Poverty Rate

Here’s a look at the poverty rate by U.S. president.

Interestingly, of the presidents shown since the 1970s (earlier than 1970 requires more work on normalizing the results), the president with the worst results is, again, President Obama.  During the first 7 years of Obama’s administration, the poverty rate has floated around 15%, up a little over 1% since Obama took office.

And again, the president who saw the best poverty rate during his time in office was Nixon.  During Nixon’s time in office, the poverty rate got as low as 11%.

Poverty Rate by U.S. President

Conclusion

Overall, in inspecting the poverty figures recently released by the Census Bureau by U.S. president, interestingly, the least favorable American president for poverty improvement is President Obama.  During Obama’s time in office so far, another 2 million individuals have been added to the poverty roles, with the overall poverty rate increasing by about 1%.

The president that saw the best poverty rate during his tenure in office was President Nixon.  During his administration, the number of individuals living in poverty declined by about 1 million, with the poverty rate dropping by about 1%.

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In America, it’s long been a cornerstone of national pride – entrepreneurship.  Americans pride themselves on their competitiveness and ingenuity.  Is this self-view still accurate?

Here’s a look at recent data from the Organization for Economic Cooperation and Development (OECD).  The data provides some interesting views on entrepreneurship around the globe.

 The U.S. Picture

Here’s the U.S. picture.  The figure captures new enterprises since 2007, meaning 2007 is set to 100.  When the index is above 100, it indicates there was a net increase in new businesses (i.e. business starts less business closures is positive).  When the index is below 100, it indicates that business closures surpassed business starts. Unsurprisingly for observers of how Americans respond to economic pressure, business creation took at dip during the recession, bottoming out in the second quarter of 2009 at 95.05.

Following the recession, business creation grew fairly moderately, experiencing some slight growth flattening during parts of 2011 and 2012.

Overall, since 2007 the OECD’s New Enterprise Index for the United States stands at 105.84, meaning that net business creation is up 5.84% since 2007.  That’s about 6% growth over about 8 years.  Seems low, certainly much lower than population growth, but how does it compare to entrepreneurship around the globe?  The next graphic has that look.

New Enterprise Index Since 2007, U.S. Source: OECD

The International Picture According to the OECD

Before addressing the details of the OECD figures, it’s important to note that only certain countries are captured in OECD figures.  Notable missing figures include China, India, and Brazil, among others.  With that said, here’s the look at business creation by country since 2007.

Before looking, which country would you guess would be on top?  The Americans?  The Germans?  Who? Interestingly, it’s the French.  Since 2007, the New Enterprise Index for France is up to 161.3, meaning new business creation is up 61.3%.

In second place is the United Kingdom at 151.4, followed by Australia at 150.3, Sweden at 127.7, and Portugal at 119.5.

On the other end, Spain is down to 68.4.  Joining Spain near the bottom are Finland at 79.1, Russia at 81.2, Germany at 83.2, and Italy 84.6.

The Business Cycle

Perhaps just as interesting as who is on top is how individuals in various countries responded to the recession. It’s quite clear that the French responded to the recession by individuals starting new businesses.  A similar response is present in Sweden and the United Kingdom.

On the other side, in most countries business creation dropped significantly during the recession.

New Enterprises Since 2007, Select Countries Source: OECD

Conclusion

The data does not indicate that Americans, in general, have or are losing their entrepreneurial spirit.  However, they are definitely lagging behind many other countries around the world.

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