Obama’s nightmare economic re-election scenario unfolding?

posted at 10:05 am on August 19, 2011 by Ed Morrissey

In order to win re-election, Barack Obama really needs an economic renaissance.  As James Pethokoukis reports for Reuters, it’s looking increasingly clear that he’s not going to get it.  The big analysts are now banking on almost zero growth and even higher unemployment than we have now for next year’s presidential election:

The White House’s worst-case scenario for the economy on Election Day next year has become Wall Street’s baseline scenario. After looking at a string of weak economic reports and Europe’s growing fear of debt meltdown and contagion, JPMorgan – led by Obama pal Jamie Dimon – has just come out with a politically poisonous forecast.

The megabank now thinks the economy won’t grow much faster over the next 12 months than it did during the first half of this year — and that’s assuming Europe doesn’t go all pear shaped. It sees GDP growth at just 1.5 percent this year, 1.3 percent next year with unemployment at … 9.5 percent heading into the final days of the election season. “The risks of recession are clearly elevated,” the bank said. Here’s its reasoning:

Consumer sentiment has tumbled and household wealth has deteriorated. Survey measures of capital spending intentions have moved lower and the housing market shows little sign of lifting. Small businesses, retailers, builders and manufacturers all report a weaker business environment. Global growth has disappointed and foreign growth forecasts have been taken lower. In response we are lowering our projection for growth, particularly in the quarters around the turn of the year.

Team Obama had better permanently shelve any plans of running a “Morning in America”campaign. In fact, if a) the economic forecasts of Morgan Stanley, JPMorgan and Goldman Sachs are accurate, and b) voters behave as they usually do during bad economic times, then c) Barack Obama will be a one-term president. No president in the modern era has been reelected with the unemployment rate higher than 7.4 percent, much less two percentage points higher.

It’s worth noting that we’d have to actually improve to get to 1.5% GDP growth in 2011.  The advance Q2 number was 1.3%, and the Q1 figure got downgraded to 0.4%.  So far, there have been no indications of improvement by the middle of Q3, and the Philly Fed economic index drop suggests a weaker GDP number for this quarter.  If we stay in the mid-1% range for an extended period of time, we will start losing net jobs again, which will feed into the pressure on Obama.

Basically, we’re looking at a replay of 1980’s election, and perhaps even the 1976 election as well, although that had a lot of other baggage than just economic malaise, such as Gerald Ford’s pardon of Richard Nixon and general anger at Republicans for Watergate.  George H. W. Bush lost his re-election bid after the economy tipped over into a mild recession in 1990-1 and had already begun recovering by 1992; Clinton ran on the economy and managed to win it in a three-way race.  These kind of economic numbers suggest a landslide defeat for Obama.  Even if they turn out to be a little on the pessimistic side, Obama won’t get much support for, say, 2.2% growth and 8.7% unemployment by next summer.

Can Obama make the election next year about anything else but the economy?  The only issue that voters care about at even close to the same level is the federal budget deficit and the debt, where Obama wants to raise taxes and leave the drivers of debt and deficits – entitlement programs – largely alone.  Unless Obama manages to score a big victory on national security, this next election is looking pretty grim.  And Obama can ask Bush 41 about how much a big victory over Saddam Hussein in 1991 helped him in the 1992 election.

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Comment pages: 1 2

He seems to have lost any economic footing.
We’ll know for sure if his Big Jobs Speech consists of:
“Put people back to work – Don’t use that ATM! Go inside and use a teller.
Don’t use a kiosk at the airport! Demand a ticket agent.

eeyore on August 19, 2011 at 5:44 PM

someone here or over at Ace commented that there is billions left in TARP fund that Bambi will give to teachers & other union people (like they would vote for someone else?) & throw into construction projects to make everyone think that something is happening.

mind you, the money could go back into the Treasury but i bet it doesn’t

kelley in virginia on August 19, 2011 at 10:32 AM

Even that wouldn’t help. The Dem’s have wrapped every bit of new projects in construction around so many layers of bullcrap regulations, that they’ll never get started in time.

Jimmy Doolittle on August 19, 2011 at 5:50 PM

The biggest thing I fear these days is that someone will launch a doomed third party candidacy ala Ross Perot. The two that come to mind are Trump and Ron Paul, either of whom could pull enough support away from whoever the GOP nominates to give Bambi a Clintonesque victory.

I just hope that voters (or potential 3rd party candidates) will put themselves in the shows of Nader voters (or Nader) who woke up the next morning (OK, a month later) to see they’d helped elect their nemesis to a 2nd term.

I wish the US had a rank-preference voting system whereby if your first choice doesn’t win your vote could go to your second choice. I think it would be fantastic for letting voters express their true preferences, rather than forcing us to be risk averse.

SoRight on August 19, 2011 at 6:01 PM

IndieDogg @ 5:08

Isn’t this the SECOND TIME he’s been seen riding a too small girl’s bike ?? And that stupid helmet. It’s not like he’s doing some off road mountain biking like W. used to. He’s on a freakin’ bike path going about 5 mph tops. Is he really that afraid ? The man’s either stupid, or just doesn’t care. I seriously thought that photo was a reprint from last year’s vacation.

teacherman on August 19, 2011 at 6:39 PM

I always knew he was stupid and ignorant of history and economics but this proves it. As someone who’s only about his own power and glory, you would think he would do the obvious to get the economy going again in order to get reelected – cut taxes and eliminate regulations and the strangulation on the oil and gas industry. Since it seems he can’t do that, it just proves my suspicions that they must not teach history and economics at Harvard these days or he never took the classes. Or maybe he is just stupid.

Common Sense on August 19, 2011 at 7:01 PM

The Changing P.R. Schtick by a Chicago Thug

We haven’t heard much from Doris Kearns Goodwin and her book on President Lincoln lately. I guess that our POTUS could only use that PR for so long. Now rivals are called “teabaggers”, the source of trouble and terrorists.

I remember the sanctimony of so many lefties on so many issues but the worst were the comparisons to the absolute greatest and most unifying leaders of the past. It was nauseating.

I think the author of the book trashed some conservative on the subject of President Lincoln having rivals in his cabinet. The poor ignorant c had it wrong and the comedy channel host loved it.

The real joke is on the Democrat Party.

IlikedAUH2O on August 19, 2011 at 9:17 PM

The biggest thing I fear these days is that someone will launch a doomed third party candidacy ala Ross Perot. The two that come to mind are Trump and Ron Paul, either of whom could pull enough support away from whoever the GOP nominates to give Bambi a Clintonesque victory.

SoRight on August 19, 2011 at 6:01 PM

Geeeeez…forgot all about that scenario.

Thought Trump went away, but he was back on Susteren this week. Seems like he wants to stay in the limelight for some reason.

Dr. ZhivBlago on August 19, 2011 at 11:05 PM

The two that come to mind are Trump and Ron Paul, either of whom could pull enough support away from whoever the GOP nominates to give Bambi a Clintonesque victory.

SoRight on August 19, 2011 at 6:01 PM

Trump possibly, RP no, at least not if we’re talking POTUS or I’m horribly wrong in my estimations. Even now I don’t see much support for a third-party candidate…unless America suddenly gets sick of the meager offerings of the big two en masse.

Uncle Sams Nephew on August 19, 2011 at 11:13 PM

I think we’ll have much bigger things than the economy to worry about in 2012–civil insurrection, world war, and famine to name a few. And with Obama in charge, our country will be in the worst possible position to deal with them. Things do not look good for America right now.

zoyclem on August 20, 2011 at 8:20 AM

Obama will rerun the Truman 48 campaign. Expect his jobs plan to include at least two or three items that make it impossible to get it through the House. That way he’ll have the villains he needs to run against next year. Here comes the “Do Nothing Congress.”

Fred 2 on August 20, 2011 at 9:54 PM

Can Obama make the election next year about anything else but the economy?

Well, there’s always Plan B. Blame the other guys.

Don’t laugh. He’s still trying.

didymus on August 20, 2011 at 11:59 PM

Comment pages: 1 2