As Barack Obama was delivering his speech on the nation’s long-term debt crisis, word came that JP Morgan has radically downgraded its projection of the nation’s short-term prospects for economic growth. Morgan now thinks the economy will grow at an annual rate of 1.4 percent this year. This comes hard on the heels of Macroeconomic Advisers lowering its growth projection for 2011 from 4 percent at the beginning of the year to 1.7 percent today.
These aren’t just horrible numbers for the U.S. economy. They are a potential death knell for Barack Obama’s presidency. There is no way tepid growth of this sort is going to make a dent in the nation’s overall employment numbers—and it stands to reason that if unemployment is higher at the time of the 2012 election than it was when he took office in 2009 (7.6 percent), he is exceedingly unlikely to win a second term.
Combine that with the runup in gas and food prices, and you are looking at a presidency in serious condition—not yet critical, because these are projections, after all, and who knows? Economists get this wrong all the time. There was also good potential news today on the employment front, that the number of posted job positions is at its highest since 2004.
Still, the sobering possibility that we are in something of a permanent doldrums presents a weird irony. The lubriciousness with which Obama went after Paul Ryan’s serious and stark budget proposal earlier today suggests that he thinks the GOP went for the bait—that he demanded a serious debt-reduction plan, then got one from Ryan, and is now intending to build his reelection campaign on attacking it.
But what if the misdirection goes the other way? What if Obama is making a mistake focusing on the long-term debt issue and defending the entitlements—when he should really be panicking and doing whatever he can think of to get some economic growth going so that he will be in a position to prevent those Bush tax cuts from being voted back into effect a month after the 2012 election?