The economic news today, in which we learned that the second-quarter growth figure was reduced down to 1.6 percent, is extremely discouraging. This rate is well below what is needed even to sustain the current unemployment rate of 9.5 percent. On top of that, as a friend of mine reminds me, the current deficit, which the CBO estimates will be more than $1.3 trillion in 2010 and is already seen as “unsustainable” by even the Obama administration, will get worse rather than better. Anemic economic growth translates into lower revenues and higher deficits.
Among the array of political problems facing Democrats is that since the fourth quarter of 2009, when the economy grew 5.0 percent, we are rapidly decelerating. In the first quarter of this year, the economy grew at 3.7 percent, and last quarter, it grew at 1.6 percent. Next quarter is likely to be about as dismal, meaning unemployment will rise.
What this all means is that the public is far more inclined to hold Obama responsible for the state of the economy, especially because the administration lauded the “economic recovery” at the end of last year. If it took credit for things at the end of last year, it’s doubly difficult to blame things on Bush this year.
A double-dip recession, then, is about the worst thing that could happen to Democrats.
Compounding their problem was the announcement that this was going to be the “Recovery Summer.” It has, in fact, turned out to be a summer characterized by more economic misery. This mistake was comparable to the White House predicting that unemployment would not exceed 8 percent and Vice President Biden assuring us that we’d see 500,000 new jobs a month this summer. All of these qualify as unforced errors, and the White House is paying dearly for them.