Maybe the worst thing that could happen to the president and his party would be for the economic recovery from the 2008 financial crisis to stall out. But that’s exactly what might be happening.
Last week, the president told town hall participants in Jamaica that one of his greatest regrets was not warning the nation that the recovery would take years. But that admission reflects a whole universe of anxieties that went unspoken. Not only is the recovery taking years to materialize, it may be in the process of reversing.
“The global economy is mired in a ‘stop and go’ recovery ‘at risk of stalling again’, according to the latest Brookings Institution-Financial Times tracking index,” >The Financial Times reported on Sunday.
The world economy grew 3.4 per cent last year, according to the IMF, roughly at its long-term average rate, which disappointed many officials who expected faster expansion because output is still recovering from the effects of the 2008-09 global financial crisis and faster-growing emerging economies now account for more than half of the world economy.
Last week, Christine Lagarde, head of the IMF, described the world’s current economic performance as, “just not good enough”.
The Eurozone is growing only modestly though it has managed to stave off a Greek debt crisis. “Business confidence is weak and deflationary pressures are still a concern,” the Brookings Institution report warned. “China’s economy is facing a broad slowdown—growth in industrial activity has slowed significantly, producer prices continue to fall, and various other indicators of economic activity indicate a loss of momentum.”
The strength of the American dollar is about all that is buoying the global economy, according to this study. But the strain of that burden is starting to catch up with the U.S. economy. In March, hiring expanded at the slowest rate since December, 2013. The labor force participation rate is sinking and remains at its lowest levels since the late 1970s.
“Manufacturing is declining, and consumers are not spending despite a huge cash infusion from cheap gas prices,” Politico cautioned. “The housing market remains relatively weak. And while the jobless rate is close to where it was before the financial crisis, middle class incomes are not rising, the size of the labor force remains near a 30-year low and few economists see prospects for much faster growth on the horizon.”
After years in which the popular American press sang Barack Obama’s praises for the economic recovery he engineered, the news media is finally beginning to notice that not everyone is benefiting from this supposed economic revitalization. Though it strained to express hope in the future, The New York Times was forced to concede in January that the middle class is shrinking at a terrifying rate. That report also noted that social welfare programs like Social Security and Medicare, “originally set up as safety nets to protect seniors from falling into poverty after retirement,” now serve as a backstop against absolute destitution for millions of Americans.
In an appearance on CNBC on Monday, President Obama’s former White House Chief of Staff Bill Daley confessed that most Americans have not enjoyed the benefits of the recovery (hat tip Washington Free Beacon):
“Hillary Clinton’s challenge is going to be to come up with different plans,” Daley said after being prodded to respond to the economic failures of the Obama era. “She can’t run for the third term of Barack Obama economically.”
As a matter of fact, the public’s favorable impression of Obama’s handling of the economy is the only thing keeping his job approval rating afloat. As recently as December, opinion surveys showed the president was underwater by double digits for his handling of the economy. As gas prices collapsed over the course of 2015, however, that approval rating spiked to the point that some polls now show pluralities approving of the president’s approach to America’s economic affairs.
If that support collapses in the same way that the public’s perception of Obama’ s handling of foreign affairs has, the Democratic Party will find maintaining control of the White House a difficult prospect. Daley’s claim is the same contention made by the Democrats’ progressives: The economic recovery has only benefited the class of American financial professionals and the rich rather than the nation as a whole. But Hillary Clinton, with her Wall Street ties, is going to right that ship when Barack Obama couldn’t? Even if committed Democrats believe that, most of the rest of the country won’t.
If it wasn’t already an uphill road to the Oval Office for Clinton, and it is, it will be worse if the economic recovery decelerates. But that seems to be what is happening.