Update 12:15 p.m.: Statement from the Romney campaign, issued by former Minnesota governor Tim Pawlenty: “President Obama has been claiming that his economic policies have ‘worked.’ This morning’s GDP numbers suggest otherwise. It seems that the President’s poor stewardship of the economy is only going to come to an end when his term comes to an end. Instead of generating growth and jobs, he has only generated uncertainty. Let’s hope that the President finds the time amid his busy fundraising schedule to meet with his Jobs Council at least on one more occasion in what remains of his failed presidency.
???We tried our plan, and it worked,??? President Obama claimed in California on Monday.
If that???s true, then his ???plan??? was to bury the U.S. economy in a shallow grave. The latest GDP numbers are out, and the most flattering adjectives anyone can think of are ???tepid??? and ???disappointing.??? Second quarter GDP grew at a perilous 1.5 percent.
???In part,??? the New York Times notes, ???the economy subsided after an unseasonable spurt during the warm winter, and in part it followed the pattern of the past couple of years – one of hopes raised, then dashed by wary business owners and households trying to reduce their debt.???
That sounds like a great Obama 2012 slogan: ???Hopes Raised, Then Dashed.???
But there???s more going on behind these numbers. The Times describes the economy as ???losing the momentum it had appeared to be gaining earlier this year.??? In fact, the new report includes some extremely dramatic revisions to earlier numbers, including an astonishing upward revision of 1.1 percent to the fourth quarter of 2011.
That means the current slowdown is actually sharper than it appeared, and it already looked very sharp. Things have gotten worse, faster, than previously believed. From a single quarter of decent but unspectacular 4.1 percent growth at the end of 2011, we???ve fallen to 1.5 percent today. Economies aren???t supposed to stall like this, three years after a recession ends.
There are many reasons for this slowdown. CNBC is clear about one of them: ???The biggest factor weighing on the recovery is fear that politicians in Washington would be unable to avoid the so-called fiscal cliff at the turn of the year, economists said.???
In other words, everyone in the business sector understands what Barack Obama made himself forget: you don???t raise taxes in a recessionary environment, especially on small businesses, which have been targeted for tax hikes in the bill Senate Democrats just passed.
Consumer spending is also weak, notably in the automobile industry, which has been propping up those spending numbers for a while. General Motors stock just hit a new low, bringing the taxpayer loss on the ???signature achievement??? of Obamanomics ??? which the President frequently points to as evidence of his great leadership ??? to about $35 billion. In the land of You-Didn???t-Build-That, a loss of $35 billion to the taxpayers, in order to give labor unions control of a private company that should have been allowed to undergo normal bankruptcy procedures, is considered a smashing success.
Another reason the numbers in past quarters were pushed up, making our current decline steeper, is that businesses were buying up lots of inventory. This now looks like hopeful anticipation for demand that has not arrived, which will push future growth down. That???s not going to make for a pretty employment picture. Neither will the coming decline in exports, which are doing fairly well right now??? but most of the countries we export to are facing their own looming economic crises.
Interestingly, the New York Times observes as a footnote that the new data reveals a large spending increase by state and local governments in 2009, followed by cutbacks over the following two years. ???Officials said they did not have enough information to explain the previously unreported increase, except to say the money was not spent on personnel or on infrastructure projects, the two categories that might have benefited most directly from the federal government???s stimulus programs,??? the Times reports.
But… that trillion dollar stimulus was supposed to be all about ???infrastructure!??? Where did all the money go? Actually, that might be the best Obama 2012 slogan.
Update: Statement from the Romney campaign, issued by former Minnesota governor Tim Pawlenty: “President Obama has been claiming that his economic policies have ‘worked.’ This morning’s GDP numbers suggest otherwise. It seems that the President’s poor stewardship of the economy is only going to come to an end when his term comes to an end. Instead of generating growth and jobs, he has only generated uncertainty. Let’s hope that the President finds the time amid his busy fundraising schedule to meet with his Jobs Council at least on one more occasion in what remains of his failed presidency.