More and more, the political cake looks fully and thoroughly baked. Oh sure, perhaps congressional Democrats can sidestep the coming Republican wave through clever campaign tactics. Perhaps they can de-nationalize the November midterm elections by successfully waging dozens of bloody, up-close-and-personal knife fights coast to coast. Make every Republican a controversial Sharon Angle or Ron Paul with a radiation vibe.
So how goes the economic news today? The job market?
The jobless claims data remain the weakest indicator of labor market activity. On the face of it, the rise in the four-week average to the highest level since the beginning of March points to a weakening in the labor market and a potential decline in private payrolls. … we find the level and direction in jobless claims somewhat troubling and the increase is likely to feed double-dip fears. (RDQ Economics)
Liberal pundits and economists such as Paul Krugman have no use for the White House “Summer Recovery” PR tour. (Note that it isn’t called the “Prosperity Tour.”) They continue to attack the Obama administration for worrying too much about the budget deficit and too little about high unemployment. The White House response has been three-fold.
“Hope” wasn’t just a major theme of Barack Obama’s 2008 presidential campaign. It also might be a one-word summation of the 2010 midterm campaign strategy devised by the White House and Democrats on Capitol Hill. They hope voters get more comfortable with healthcare reform. They hope voters really care about the technocratic bank bill. And, most importantly, they hope voters begin to sense some impact of a slowly recovering economy on their personal financial situation.
As former Goldman Sachs CEO and ousted New Jersey Governor Jon Corzine can attest, a business background hardly guarantees political success. Though California is no startup website, former eBay boss Meg Whitman, now the GOP’s nominee for governor, might have the right skill-set to tackle the Golden State’s fiscal challenges.
The analogies have been flowing almost as fast as the oil from the Gulf seabed. The BP spill is Barack Obama’s Katrina. Or maybe it is his 9-11. Pick your disaster of choice. But however you want to classify it, the expanding oil slick is a mess for the White House:
The 290k increase in jobs is great news for the WH and congressional Democrats. The rising unemployment rate, from 9.7% to 9.9%, is not. Yes, it reflect workers moving back into the workforce, but it is still a lousy headline number. So, too, the rise in the broad U-6 unemployment number to 17.1%. The good news also gets drowned out by the big drop in the stock market and trouble with EU sovereign debt. Even if Greece’s problems do not metastasize, they still provide unsettling headlines for U.S. voters. Like something is still not right in the world. Then, of course, you still have the moribund U.S. housing market and all that evaporated net wealth. Stronger growth may be enough to keep Republicans from capturing the House and Senate, but big gains nonetheless.
Those who argue that Democrats might lose one or both houses of Congress are making an economic argument. Slow growth/high unemployment = angry, anti-incumbent voters. But what if the economy really perks up? First some analysis by Larry Kudlow: