“The last month has been a horror show for the U.S. economy, with economic data falling off a cliff, according to Mike Riddell, a fund manager at M&G Investments in London…
“‘US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing.’
“‘And that’s just in the last week and a bit,’ said Riddell.”
“Today’s job figures are extremely bad news for the Obama administration, and as I noted in my last post, an electoral disaster for Barack Obama in November 2012 is now looking like a distinct possibility. According to the Bureau of Labor Statistics, unemployment has risen again to 9.1 percent, with private employers adding a mere 54,000 jobs in May. That’s up from 9 percent in April, and 8.8 percent in March…
“Years of profligate spending, massive bailouts and useless stimulus measures have made America poorer, not richer, and threaten the long-term economic foundations of this great country. President Obama’s big government experiment has been a dangerous failure, only further proof that the deadening hand of federal intervention is the last thing America needs at this time. The United States needs more economic freedom, less government regulation and spending, and lower taxes if it is to create jobs, wealth and prosperity, a message that seems to have been lost on the Obama presidency as it drives the United States towards the financial abyss.”
“During Friday’s visit to the plant in Toledo, Obama did not mention the grim jobs number that was released Friday. Rather, he talked of saving a ‘proud industry’ and ‘more than a million jobs.’…
“‘The prospect of economic growth getting up to a point and unemployment getting down to a point that is comfortable for an incumbent are declining by the month, and are now not very high at all,’ said William Galston, a policy adviser in the Clinton White House and a veteran of Democratic presidential campaigns.
“He added, ‘I hope there’s someone on the inner circle with the standing and the guts to tell the president that, if things continue the way they’re going, despite everything he’s done, he’s going to be in trouble.'”
“So let’s say [unemployment is] 9 percent in November 2012. That’s 15.4 percent higher than the day he took office. Let that sink in. That’s an awfully tough number to sidestep. The GOP ticket and a thousand surrogates will be on television constantly driving that number home, and why shouldn’t they? That’s about as heavy as campaign artillery gets. It’s a special gift to the GOP candidate both because it happens to be true and because given the American public’s general economic illiteracy, with enough repetition, millions of Americans will walk away from their televisions thinking that the unemployment rate is 15 percent!…
“Of the 19 states at or above the national [unemployment] average, 11 were Obama states in 2008. They include some states he’s not going to lose under any non-fantastical circumstances (Rhode Island, Connecticut), and others, notably California, that aren’t quite that certain a lock but are pretty close. But consider these cases: Michigan is at 10.2 percent. Mitt Romney has Michigan roots. Florida is at 10.8 percent. North Carolina, also 10.8 percent. Take those three away from Obama: poof, 60 electoral votes. (Ohio, somewhat surprisingly, is below the national average, at 8.6 percent, but that’s still a worrisome number and higher than when Obama took office.)…
“For my part, I think that at 8.5 percent or so, if we’re gaining at least 300,000 jobs a month by next fall, the president ought to be able to make a credible case that we’re finally headed in the right direction. But every bleak month like this one makes a hypothetical month like that one sound pretty far away—and there are only so many months left.”
“For eighty years we have defined the American dream as an owner occupied family home, preferably with a nice swathe of crabgrass-free lawn around it. The home mortgage was the centerpiece of a society of consumers based on debt-financed living. It was life on the installment plan. The latest downturn in the housing market is one more grim signal that in its current form, the American Dream is going the way of the dodo…
“[S]omething has, I think, changed. Something big. Humpty Dumpty has fallen off the wall. A social ideal has received an irrecoverable blow and the era of consuming our way to prosperity is drawing to a close. The country has maxed out its credit cards, and we are going to have to live within our means.
“This isn’t the first time the American Dream has died. The old dream — your own farm rather than your own home — once dominated American culture, politics and family life as much as the family home ever did. The slow and painful death of that dream was one of the country’s core preoccupations in the first half of the twentieth century. The death of the new dream is likely to be a big deal as well.”