Can Obama’s 2012 hopes survive 9%+ unemployment?

August 5, 2011

After looking at today’s anemic unemployment report, Goldman Sachs drops this H-bomb on the Obama campaign:

We have lowered our forecast for US real GDP growth further and now expect real GDP to grow just 2%-2½% through the end of 2012.  Our forecast for annual average GDP growth has fallen to 1.7% in 2011 (from 1.8%) and to 2.1% in 2012 (from 3.0%).  Since this pace is slightly below the US economy’s potential, we now expect the unemployment rate to be at 9¼% by the end of 2012, slightly above the current level.

2. Even our new forecast is subject to meaningful downside risk.  We now see a one-in-three risk of renewed recession, mostly concentrated in the next 6-9 months.  There are three specific issues that concern us.  First, a worsening of the European financial crisis, and a failure of European policymakers to respond adequately, could lead to a further tightening of financial conditions and credit availability, which would worsen the economic outlook globally.  Second, our forecast assumes that the payroll tax cut—currently scheduled to expire at the end of 2011—is extended for another year, but if that failed to happen the fiscal drag in early 2012 would increase significantly.  Third, increases in the US unemployment rate have historically had a tendency to feed on themselves, and this could happen again.

The consensus used to be that President Obama might be OK if the jobless rate fell below 8 percent by Election Day.  That seems increasingly unlikely. The economy is, at best, in slow-growth mode, just churning and churning, creating few jobs.  Comparisons to President Reagan’s 1984 “Morning in America” campaign are looking ever-more ridiculous.  Under Reagan’s tax-cut driven recovery, unemployment fell from 10.8 percent in December 1982 to 7.2 percent by Election Day as the economy grew 4.5 percent in 1983 and 7.2 percent in 1984. In fact,  Jimmy Carter’s 1980 campaign might be the better comparison. The unemployment rate jumped from 6.0 percent in December 1979 to 7.5 percent on Election Day 1980 as the economy shrank 0.3 percent.

11 comments

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[...] Pethokoukis writes, "Goldman Sachs drops this H-bomb on the Obama campaign: We have lowered our forecast for US [...]

[...] Pethokoukis-Can Obama’s 2012 hopes survive 9%+ unemployment? [...]

One can only hope…that the welfare state has failed, just as all pipe dreams do. We’ve run out of other people’s money since the spending spigot was turned on full blast in 2007 (36% increase in spending under Democratic Congressional Control) and they are arguing that returning to the 2006 budget (witha 200 billion dollar deficit) is “irresponsible” and “extreme.” Only by returning to those spending levels, and then cutting by 30% across the board will be able to keep our country from founding. Unfortunately, neither party has the courage or the character to do so…and we’ll all pay for the result.

Rich Vail
Pikesville, Maryland
The Vail Spot dot Blogspot dot Com

Posted by rvail136 | Report as abusive

Don’t you mean Reagan’s deficit-spending driven recovery? And what about his 1983 tax INCREASES? Just curious.

Posted by AlanVanneman | Report as abusive

Obama’s strategy won’t change. He’ll double down on Alynsky’s Rules for Radicals deflect the economic issues and focus on what community organizers do best pit one group against the other. We’ll hear claims of racism like never before and more citizens as well as non-citizens along with the deceased will be bused to the voting booths patrolled by all kinds of Black Panthers.
It will be ugly

Posted by tgambogi | Report as abusive

[...] Pethokoukis asks, “Can Obama’s 2012 hopes survive 9%+ unemployment?” The elite media will give it the old Ivy League try to greatly increase his odds. Because all media [...]

[...] Reality: Can Obama’s 2012 hopes survive 9%+ unemployment? [...]

I have faith that American voters will do the right thing in 2012 and toss this fraudster from Chicago into the dustbin of history. Then the true rebuilding and retooling of America’s peerless economy can begin.

That said, I hope my faith isn’t misplaced.

Posted by Elektrobahn | Report as abusive

Democrats controlled congress during Regan’s deficits. The only way to get those tax changes was to load up on Democrat pork barrel spending.

Posted by fastred | Report as abusive

This is a much bigger H-bomb that anyone reading or writing knows. Goldman Sachs and its forecasters have been in ObamaSoros’ hip pocket since day one – if they’re projecting growth rates for public consumption this high the truth is they probably know they’ll be much less.

Posted by uncledirtnap | Report as abusive

[...] Via James Pethokoukis at Reuters.com: From Goldman Sachs today: We have lowered our forecast for US real GDP growth further and now expect real GDP to grow just 2%-2½% through the end of 2012. Our forecast for annual average GDP growth has fallen to 1.7% in 2011 (from 1.8%) and to 2.1% in 2012 (from 3.0%). Since this pace is slightly below the US economy’s potential, we now expect the unemployment rate to be at 9¼% by the end of 2012, slightly above the current level. [...]

Rich Vail, you don’t have to hope. The Welfare State HAS failed.
The problem is its advocates understanding that, and getting up and holding their ends.
The funny thing is, it didn’t have to be this way.
They could never content themselves with the 20-30% they siphoned off society and leaving us alone to keep and grow the remainder as we please, instead resenting what they others have rather than do what’s needed themselves to attain more of what they want compared to their neighbors. They had to have more, now they (will) have less, if not nothing.
It either ends not well, sooner, or ugly, later. That it does is inevitable.

Posted by BuddyPC | Report as abusive

President Obama has been handed a dead horse in 2008 and was expected to resurrect it…IMO he has done exemplary under the circumstances, given that the American public is NEVER content, the legislative branch has proven to be a red herring, and the economy and financial collapse dealt him unavoidable yet treatable problems.

Three key factors will affect the 2012 elections. T

he minorities will be unchangeable in their votes, they are, have been, and will be pro-Obama.

The wage earners have been undecided in their opinions of Obama, because their general opinion with the legislative branches, Congress goes on vacation for a month while unemployment goes unchecked, and that feeling of discontent bleeds over to the administrative offices of our government.

2012 needs a challenging public promotion to vote. We cannot afford to sit in our homes and watch the elections from the comfort of our TV chairs.

We need a massive promotion for people who never vote, the get to the polls and do so. America is a miserable example of lazy citizens with only 54% turning out to vote for the presidential election and only 37% for mid-terms.

Other countries put us to shame and we need to remember just 5 years ago when the Iraqi populace dared to go out under fear of death to cast their vote for the first time in 30 years, as our troops served and died for them to have that “freedom”.

We cannot be classed as a fatten calf when it comes to voting. Far too many claim voting makes no difference anyways, when they forget that the power of the vote is what gave Americans their rights and freedoms, and changed the way those rights were exemplified in the 50′s and 60′s because people DID vote.

Those reasons alone should drive us to the polls.

Then decide just who you wish to vote for.

Come 2012 though, one of the biggest problems will be with choice.

Just who do the Republicans think they will place on the chopping block for a candidate, Bachmman or Palin? I would not be surprised to see them try to put a woman in for the presidency, just to gain the female vote, but?

Posted by djdrew103 | Report as abusive

President Obama has been handed a dead horse in 2008 and was expected to resurrect it…IMO he has done exemplary under the circumstances, given that the American public is NEVER content, the legislative branch has proven to be a red herring, and the economy and financial collapse dealt him unavoidable yet treatable problems.

Three key factors will affect the 2012 elections. T

The minorities will be unchangeable in their votes, they are, have been, and will be pro-Obama.

The wage earners have been undecided in their opinions of Obama, because their general opinion with the legislative branches, Congress goes on vacation for a month while unemployment goes unchecked, and that feeling of discontent bleeds over to the administrative offices of our government.

2012 needs a challenging public promotion to vote. We cannot afford to sit in our homes and watch the elections from the comfort of our TV chairs.

We need a massive promotion for people who never vote, the get to the polls and do so. America is a miserable example of lazy citizens with only 54% turning out to vote for the presidential election and only 37% for mid-terms.

Other countries put us to shame and we need to remember just 5 years ago when the Iraqi populace dared to go out under fear of death to cast their vote for the first time in 30 years, as our troops served and died for them to have that “freedom”.

We cannot be classed as a fatten calf when it comes to voting. Far too many claim voting makes no difference anyways, when they forget that the power of the vote is what gave Americans their rights and freedoms, and changed the way those rights were exemplified in the 50′s and 60′s because people DID vote.

Those reasons alone should drive us to the polls.

Then decide just who you wish to vote for.

Come 2012 though, one of the biggest problems will be with choice.

Just who do the Republicans think they will place on the chopping block for a candidate, Bachmman or Palin? I would not be surprised to see them try to put a woman in for the presidency, just to gain the female vote, but?

Posted by djdrew103 | Report as abusive

[...] I’ll leave you with this new set of economic projections for next year from Goldman Sachs via James Pethokoukis. Did I say horse tranquilizers? I meant elephant [...]

[...] news. They will be delighted.”The somewhat “truer” “underemployment” rate, is 16.1%.After the market closed came word that even the Obama-loving Goldman Sachs is now lowering GDP proje… “After looking at today’s anemic unemployment report, Goldman Sachs drops this H-bomb on the [...]

[...] swing voters pause if/when they’re weighing Texas’s record of job creation against the economic magic of Hopenchange? One reason that might explain his hostility toward [Texas's public university] system: He [...]

[...] After the market closed came word that even the Obama-loving Goldman Sachs is now lowering GDP proje… “After looking at today’s anemic unemployment report, Goldman Sachs drops this H-bomb on the Obama campaign: [...]

@djdrew103, please put down your crackpipe and step away from the keyboard. your guy just led the way to the first credit rating downgrade in modern U.S. history. he will not recover. and the answer is Perry/Bachmann. perhaps that will be enough to get all the liberal trolls to finally leave the country and give us a chance at real recovery. you heard it here, first.

Posted by senatorseven | Report as abusive

[...] more Palin tweets here: Can Obama’s 2012 hopes survive 9%+ unemployment? – Reuters Blogs (blog) #palin #movie – links to Palin Movie Stories from victory film group- http://victoryfilmgroup.com/ [...]

[...] Dark Lords downgrade the American Economic environment. [...]

[...] Via James Pethokoukis | Reuters.com. [...]

[...] they talking about a hydrogen bomb? I guess it doesn’t really matter.   No [...]

[...] Goldman Sachs expects the unemployment rate to stay at or above 9% through 2012. We have lowered our forecast for US real GDP growth further and now expect real GDP to grow just 2%-2½% through the end of 2012.  Our forecast for annual average GDP growth has fallen to 1.7% in 2011 (from 1.8%) and to 2.1% in 2012 (from 3.0%).  Since this pace is slightly below the US economy’s potential, we now expect the unemployment rate to be at 9¼% by the end of 2012, slightly above the current level. [...]

[...] Pethokoukis writes, "Goldman Sachs drops this H-bomb on the Obama campaign: We have lowered our forecast [...]

[...] Expected To Stay Above 9% Through 2012Posted: August 6th, 2011 1:08 PM | Author: Henry D'Andrea Ouch… atomic bomb on Obama’s change parade:We have lowered our forecast for US real GDP growth further and now expect real GDP to grow just [...]

We are, by all measures, in the midst of a failing economic recovery. Under these circumstances, Americans expect that policymakers in Washington are committed to improving economic conditions further.

It’s against this backdrop that conservatives are committed to taking capital out of the economy, creating more public-sector unemployment, eliminating effective jobs programs, urging the Federal Reserve to stop focusing on lowering unemployment, and fighting tooth and nail to protect a tax policy that’s been tried for 30 years without success.

By their own admission, GOP officials have said economic growth is not their priority; Hoover-like deficit reduction is. While advocating this agenda, Senate Minority Leader Mitch McConnell has said, more than once, that his “top priority” isn’t job creation, but rather, “denying President Obama a second term in office.”

It’s time to face the fact that there are people who are prioritizing the destruction of a presidency over the needs of the nation. They are willing to crash the American economy, even the global economy, to accomplish this.

Oh, and senatorseven? Standard and Poor’s says it’s Republican obstructionism and intransigence on economic policies that caused them to downgrade America’s credit. But conservatives are rejoicing over this downgrade and attempting to blame Obama for fiscal irresponsibility. Every time I think conservative logic couldn’t possibly get more blisteringly ridiculous, you lower the bar yet again.

Posted by GetpIaning | Report as abusive

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