ISH Global Insight is looking for a U-shaped recovery: 2 percent growth in 3Q, 2.4 percent in 4Q and then 1.8 percent next year. This would be typical following a banking crisis/recession. I think this will make for a very unhappy electorate.
Not that “W’ (as in the 43rd president), but a W-shaped economy. I was on CNBC today talking healthcare with Howard Dean, and he said he thought the economy would improve and then worsen again. Would that be good or bad for the Obama agenda? Certainly it was a weak economy that got Obama elected and helped him push through the $800 billion American Reinvestment and Recovery Act. But high unemployment has been sapping his popularity. And that has been bad for his agenda, especially healthcare reform. If Dean’s forecast is correct, the Dems better pass healthcare while they can. There might be a lot fewer of them in Congress after 2010.
Thinker extraordinaire Joel Kotkin gives an outline:
Given this sad political picture, the best hope now is to build an alternative perspective that focuses on the basic economic issues. This would not be the media celebrated movement of moderates–Democrats-lite and Republicans-lite–who seek kumbaya through compromise. It would, instead, require a radical third tendency–neither strictly left or right–that would draw on long-term American priorities and values.
President Barack Obama has told Americans to be skeptical of reports of an end to the recession, saying the downturn has “many more months” to run. Given the recent retail sales data, Americans seem to be listening to their economist-in-chief.
There was a Saturday Night Live skit after the 1988 election called “Dukakis after Dark.” In it, failed veep candidate Lloyd Bentsen asks failed presidential candidate Michael Dukakis, “You were going to raise taxes, weren’t you?” Dukakis, wearing a Hugh Hefneresque smoking jacket, shiftily replies: “Through the roof.”
Dude, you’re bringing me down! Or so says economist Robert Brusca:
Obama has been saying bad things about the economy ever since he got in office. As economic data improved he focused on how bad things were, not on the improvement or the trend. When the Q2 GDP figure fell by only 1% in the quarter he said there would be many more months of recession to come. … His administration was talking about deficits and about raising taxes before the recession was even over; that was reckless. Japan got into its lost decade of growth by fearing the size of its own fiscal debt and hiking taxes on consumers before the economy was strong enough to take it. Is that the model Obama is pursuing?
(Lightly microblogging this week from The Great White North)
Ed Yardeni makes the case that the job market may bounce back strongly, kind of (bold is mine):