In a speech at Macomb Community College in Warren, MI, on July 14, 2009, Obama said, “I love those folks who helped get us in this mess, and suddenly they say, ‘This is Obama’s economy.’ That’s fine. Give it to me. My job is to solve problems, not stand on the sidelines and carp and gripe.”
OK, Mr. Obama, the economy is yours. The 2012 election will be an election about the economy. If the economy is much different in October than now, it’s more likely to be worse than better. And worse is bad news for Barack Hussein Obama. The economy isn’t looking as good today as it did in February and March, causing many economists to revise their forecasts of economic growth to reflect the downward trend. The unemployment rate that is currently over 8 percent is not expected to improve between now and the election unless the government plays with the numbers as they have in the past.
The global economic picture is quite depressing and getting worse. The eurozone is in a recession that is looking more and more deep. Europe’s sovereign-debt and banking crises are getting worse. Even China, India, and Brazil are experiencing economic slowdowns. And Obama has acknowledged that Europe’s economic situation could have an effect on his own re-election prospects.
The most frequently quoted number for Gross Domestic Product (GDP) is now a very, very slow 2 percent growth. The Bureau of Economic Analysis (BEA) reported that real GDP (RGDP) growth for Q12012 was 2.2 percent, down from the 3.0 percent growth rate reported for 4Q2011, and much lower than would be “normal” for this point in a recovery from a recession. The term “stall speed” is being used to describe this economy’s growth.
The real business nonresidential fixed investment (RBNRFI) growth rate fell at a 2.1 percent annual rate between Q12012 and Q42011, continuing a downward growth trend. This fact is important because RBNRFI is what actually drives the economy. Both RGDP and employment growth are a direct function of RBNRFI. The notion that “spending” drives the economy is Keynesian economic nonsense. A falling RBNRFI or growth rate equals a recession.
For comparison, look at these figures:
- RBNRFI grew by 38.6 percent during the first three years of Clinton’s second term, spurred on by a capital gains tax cut. During the same period, RGDP increased by 14.3 percent, and total employment increased by 5.2 percent.
- RBNRFI grew by 22.7 percent during George W. Bush’s second term. During the same period, RGDP increased by 7.8 percent, and total employment increased by 4.4 percent.
- RBNRFI has falen by 6.6 percent during Obama’s three year in office. During the same period, RGDP has fallen by 1.2 percent, and total employment has fallen by 1.8 percent.
This election is far from over. The unexpected could happen to change everything. But unless Obama can discredit Romney by convincing enough voters that Romney is a ruthless, uncaring corporate raider, this will be a hard election for Obama to win.
But that’s just my opinion.
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