Corporate Profits Up 68%, Wages Down 5% Since Obama Took Office In 2009

When President Obama was trying to sell his new jobs plan back in September, he declared himself "a warrior for the middle class.

"I'm happy to fight for the middle class," he said. "Because the only warfare I've seen is the battle against the middle class over the last 10, 15 years.

But the middle class might want someone else fighting on their behalf.

According to an IBD review of various economic data, while corporations and Wall Street investors have made significant gains under Obama's economic leadership, average Americans have seen their fortunes steadily decline.

Since the start of the Obama administration, corporate profits have climbed 68% (about 59% after inflation), and are now 19% above their pre-recession peak, according to the latest Commerce Department data out Tuesday morning.

Meanwhile, companies are sitting on a pile of cash that's grown 38% from Q1 2009 to Q2 2011, according to the Federal Reserve's quarterly "Flow of Funds" report.

And since Obama's inauguration, the Dow Jones Industrial Average has climbed 45%.

However, these solid gains haven't translated into prosperity down the economic ladder.

Since Obama took office, median weekly earnings have dropped almost 5% after inflation, according to the Bureau of Labor Statistics. Home prices are below their January 2009 levels; unemployment is higher, as is the inflation rate. Gas prices alone have more than doubled since January 2009.

And now more than two-thirds say the country is in decline, according to a survey by The Hill.

This is hardly the kind of progress Obama said his economic plan would produce.

Throughout his presidential campaign and early in his administration, Obama promised an end to the "Republican philosophy: Give more and more to those with the most and hope that prosperity trickles down to everyone else." Instead he, said, his policies would "foster economic growth from the bottom up.

But instead of bottom up prosperity, the record so far under Obama looks more like trickle up pain. Some other examples: Household income: Since the recovery started, household income has fallen 6.7%, according to a study by former Census Bureau officials. That's a bigger decline than during the 18-month recession, when income fell 3.2%.

Jobs: Despite job growth since the recession ended, there are still 1.4 million fewer private sector jobs today than when Obama was sworn in, according to the Bureau of Labor Statistics. And the pace of growth — 1.6 million new jobs over the past two years — is far below what's needed just to keep up with growth in the labor force.

Income inequality: After remaining essentially flat under President Bush, the gap between rich and poor has climbed in each of Obama's first two years, according to the Census Bureau. Consumer confidence: The Consumer Confidence Index dropped to 39.8 in October, down almost 10 points from when the recession ended, and almost right where it stood when Obama took office.

Misery Index: This index, which combines the unemployment rate with the inflation rate and is meant as a proxy of middle class pain, is 60% higher than when Obama took office, and it’s at a level not seen since mid-1983.

Home prices: The median price for existing home sales has dropped 4.6% since January 2009, according to monthly National Association of Realtors data. And the number of underwater mortgages is up, according to Core Logic.

Union membership: The share of private sector workers who belong to a union fell to 6.9% in 2010, compared with 7.6% the year before Obama took office, according to the Bureau of Labor Statistics.

So why the disconnect between corporate profits and the rest of the economy

Dean Baker, co-director of the Center for Economic and Policy Research, notes that companies have been focused on improving productivity. "If you are paying fewer people, that means higher profits," he said. Baker also argues that Obama should have been bolder in his policies to boost demand. "He should have been stronger in dealing with financial sector and getting more stimulus," he said.

Russell Roberts, an economist at George Mason University's Mercatus Center, says that "clearly what’s going on is that corporations are uneasy about expanding. If you're on the left, you might say it's because corporations are greedy and cruel. If you're on the right, it's because companies are uneasy about future regulations, health care costs and the prospects for growth."