Posted on 06/24/2011 8:30:39 AM PDT by Kaslin
WASHINGTON -- Federal Reserve Chairman Ben Bernanke's lower economic growth estimates for this year and next diminish President Obama's already weakened prospects for a second term.
Bernanke said Wednesday that the anemic recovery would be a lot slower than he had expected for the remainder of this year and in 2012, when Obama will be up for re-election.
The Fed's two-year projections were the political equivalent of a cold shower for Obama, whose mishandling of a persistently weak economy has earned him failing grades from a large majority of the electorate.
Bernanke's report that the economy is facing "head winds ... (that) may be stronger or more persistent than we thought" came in the midst of other data that showed a significant jump in unemployment claims, and a Congressional Budget Office (CBO) forecast that the federal government's debt, if the growth in entitlements is left unchecked, could swell to twice the size of the economy.
In a sharp turnaround from the Fed's earlier 3.1 to 3.3 percent growth forecasts that the economy would reach later this year, the central bank now expects the gross domestic product will be in the mid-to-high 2 percent range -- 2.7 percent to 2.9 percent. That's well below the growth needed to bring the economy's high unemployment rate down to normal levels anytime soon.
The Fed's 2012 growth forecasts, which were projected in April to be as high as 4.2 percent, are now estimated at 3.3 percent to 3.7 percent.
But the Fed says the average unemployment rate will still remain high this year and next, declining to between nearly 8 percent and 8.2 percent by the fourth quarter of 2012 -- the worst scenario for a beleaguered president who was hoping to run a "morning in America" re-election campaign.
Notably, the Fed sees only long-term, subpar economic growth in the 2.5 to 2.8 percent range, an anemic rate that Washington Post economics reporter Neil Irwin said would bring down the national jobless rate only "at a glacial pace."
The Fed's forecasts put a lot more wind in the Republicans' sails, as recent polls show that voters now have a lot more confidence in the GOP's ability to handle the economy than either the White House or the Democrats in Congress.
The critical question for Republicans now is whether the Obama economy's precipitous slowdown demands that they nominate the strongest candidate on the one issue that will decide the outcome of the election.
For all intents and purposes, the top Republican contenders are the three former governors who have thus far entered the race: Mitt Romney of Massachusetts, Tim Pawlenty of Minnesota and Jon Huntsman of Utah.
Texas Gov. Rick Perry may still get into the race, as could former Alaska Gov. Sarah Palin, but both may be too late to mount the kind of well-funded nationwide campaign needed to win the nomination, let alone the election. In this day and age, presidential campaigns take a full four years or more, and that rule still stands the test of time.
Pawlenty's campaign has been seriously undermined by weak fundraising and his own anonymity. Huntsman, a late entry, got off to a poor start this week after several embarrassing blunders by his inexperienced campaign staff, but he is largely unknown by the electorate at large and also faces fundraising challenges.
Romney, on the other hand, who has been running for more than four years, has built a sizable campaign war chest, raising a hefty $10 million in a single day earlier this month. He has made the weak economy and jobs his No. 1 issue, identifying himself as a career venture-capital investor who has helped build some of the most successful business enterprises in the country and knows how to create jobs.
Although he faces several challenges, including the Romneycare plan that he enacted as governor, he is the clear front-runner at this point.
The rapidly deteriorating Obama economy plays to Romney's experience and political strengths and, in the end, will likely trump all other issues the Democrats -- and his rivals for the nomination -- will throw at him.
Meantime, a little more than six months before the 2012 election year begins, the economy looms as Obama's potential Waterloo.
The economic recovery, if there ever was one, is clearly sliding backward. Punishing 9- to 10-percent unemployment rates show no sign of any significant decline this year or next, and one poll finds 80 percent of recent college graduates are unable to find work. The stock market is weakening, and with it, tens of millions of pension plans. Home sales continue to plunge along with home values.
And if all this weren't enough, the CBO says that under Obamacare, "an aging population and rapidly rising health care costs will sharply increase federal spending for health care programs and Social Security," causing "federal debt to grow to unsustainable levels."
If the economy is tanking, jobs are disappearing and America is on a slippery slope into bankruptcy, whom can Obama blame? George W. Bush?
That’s really what sucks the most about 0bama. He is so bad, such an absolute, complete disaster and failure of a president that even the worst RINO contender looks great by comparison.
Romney has strengths?
Romney would be Obama II.
73% of those polled want SOMEONE OTHER THAN Romney
Don’t let them foist another McCain or Dole on us
And what strength is that? King of the Flip Flops? The fact that, as Governor, he destroyed more jobs than he created? Or was it the fact that while governor MA had one of the worst job creation records in the Nation? (47th).
Sadly, Obama can do one thing. He can BS like an expert. He will hammer Romney on his faux jobs record. No. Romney has no strengths and will get KILLED in the general election.
Please stop trying to sell me on Romney. If I want Obama, I’ll vote Obama. Give me a Conservative please.
Exactly why is Romney supposedly an expert on the economy? Because he had some private sector success? Did that translate at all into his work in elected office? Exactly what wonderful things did Romney do for the MA economy aside from bolstering the abortion industry with $50 copays?
"As U.S. real output grew 13 percent between 2002 and 2006, Massachusetts trailed at 9 percent.
* Manufacturing employment fell 7 percent nationwide those years, but sank 14 percent under Romney, placing Massachusetts 48th among the states.
* Between fall 2003 and autumn 2006, U.S. job growth averaged 5.4 percent, nearly three times Massachusetts' anemic 1.9 percent pace.
* While 8 million Americans over age 16 found work between 2002 and 2006, the number of employed Massachusetts residents actually declined by 8,500 during those years.
"Massachusetts was the only state to have failed to post any gain in its pool of employed residents," professors Sum and McLaughlin concluded.
In an April 2003 meeting with the Massachusetts congressional delegation in Washington, Romney failed to endorse President Bush's $726 billion tax-cut proposal."
[Cato Institute annual Fiscal Policy Report Card - America's Governors, 2004.]
Mr. Romney "Disses" Amateur Radio In Televised Town Meeting
His strength is the ability to compromise at the drop of a hat.
Pray for America
Nice hair.......
Plays to Myth’s strengths?
I guess they mean Myth’s amazing ability to lie with a straight face is especially effective on desperate people.
“That’s really what sucks the most about 0bama. He is so bad, such an absolute, complete disaster and failure of a president that even the worst RINO contender looks great by comparison.”
Nope. Romney is no better than Obama. In fact, he’s worse, in that he lies about his intentions.
Never again
Good post, some of the economic guys around here need to start putting together some easily read economic packages on Romney as Governor, so that the rest of us who aren’t fluent in economics can piece together our own statements on the actual economic experience of Mitt Romney as a Governor, his sole experience in governing.
Smatter - didn't like Mr. Elizabeth Dole?
Or.....Donald Trump could be drafted to run.
No thanks. I don’t want him either
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