Suffice it to Say; Growth rate below 3 is not good news for president
By Charlie Cook
Any day now the Supreme Court will announce its decision on President Obamas health care law. Regardless of the rulings details look for over-caffeinated pundits on radio and television talk shows to immediately declare that it is the most important development to date in the 2012 presidential campaign.
The president doesnt want the election to be a referendum on the economy.
As such the Obama health care law ruling will dislodge the equally supremely important Wisconsin gubernatorial recall election which had replaced the issue of same-sex marriage which had replaced the war on women" and the issue of health insurance coverage of contraceptives.
Not having ever officially joined the pundits union I failed to get the billfold-size membership card with the rules on the back specifying that at least once every six weeks I am required to identify an earth-shattering event that will undeniably change the direction of the presidential campaign.
Sure the Supreme Courts decision whatever it will be will dominate news coverage for a few weeksuntil the next big development comes along. The key thing to remember is that for their own reasons neither President Obama nor Mitt Romney wants to spend a lot of time talking about health care reform. By the time fall comes around the health care issue will be the dog that doesnt bark.
Its pretty clear that in the absence of an unanticipated and cataclysmic event foreign or domestic this election is going to be about the economy. The room doesnt have enough oxygen to sustain any other issue for more than a few days.
Its also pretty clear that the economy is very anemic. Chances are slim that it will rebound much in the four-plus months between now and
Election Day.
The 56 top economists surveyed earlier this month by Blue Chip Economic Indicators forecast the economy registering just a 2.1 increase in gross domestic product in the second quarter. This growth rate is a bare improvement over the 1.9 percent in the first quarter with 2.2 percent and 2.4 percent GDP growth rates projected for the third and fourth quarters of this year.
Suffice it to say that a growth rate below 3 percent is not good news for a president seeking reelection. The Blue Chip forecast for unemployment is 8.2 percent for the current quarter 8.1 percent for the third and 8.0 percent for the fourth quarter.
More worrisome is that there are far more reasons why the economy might do worse than expected rather than better.
The global economic slowdown appears to be worsening. It even affects China India and Brazil the troika of real worldwide economic powerhouses in recent years. The banking and sovereign-debt crisis in Europe (which it should be noted is in a recession) could very likely spill over and slow the U.S. economy down.
And all of this is aside from the year-end fiscal cliff" when a wide variety of huge tax cuts expire and large mandatory spending cuts come due unless Congress can devise an alternative course of action.
Economists agree that going off that fiscal cliff would likely slice between 3.5 and 4.5 points from GDP growth and tip the U.S. into a new recession. That prospect alone could easily be enough to spook businesses into delaying hiring expanding borrowing and lending. The private sector is in a fetal position anticipating a second recession. This isnt a pretty sight.
Election Day is still months away. The race will undoubtedly have a lot of peaks and valleys for each candidate between now and then. But it is increasingly probable that if this election is a referendum on the economy and President Obamas handling of it he will lose notwithstanding the lousy shape it was in when he took office.
Because the president doesnt want the election to be a referendum on the economy his campaign will try to discredit Romney as an alternative. The Obama camp will have to make the prospect of a President Romney so unpalatable that voters will not want to entrust the Oval Office to him. Obamas supporters will need to persuade voters that its better to put up with what they have than take a risk with Romney.
Obamas team faces a second challenge: Even as the undecided bloc of voters looks exceedingly inhospitable to reelecting the president enthusiasm within the Democratic base outside of the African-American community is largely nonexistent. Polling data clearly show that Republicans conservatives and tea partiers are more motivated this year than Democrats liberals and what remains of the Occupy movement.
Among the key groups for Democratsyoung and Latino votersenthusiasm is very very low.
This campaign is far from over but it is clear which side has the uphill climb.
Charlie Cook a political analyst for NBC News is Editor & Publisher of The Cook Political Report. He appears regularly on the ABC CBS and NBC evening news programs as well as on Good Morning America.
