It is the view of many, if not most, of those whose livelihoods are dependent on an understanding of the economy that it will show signs of recovery, if not a roaring comeback, in the third quarter of 2009. With more stimulus money being spent, more money being loaned out, happy early tidings on foreign trade, it appears the American economic engine may cease running in reverse. The political fallout from this would seem obvious: Good news for Obama, perhaps just at a moment when he needs good news. Assuming his health-care legislation doesn’t pass before the August recess, Obama will need a powerful tide in his direction to get it done in the early fall, and impressive economic numbers may be the ticket.
Except for this fact: All these same people believe unemployment will continue to rise above 10 percent and stay there. There would seem to be a bit of a contradiction here. Ours is an economy that has been driven by consumer spending for the past 25 years; it’s therefore a bit difficult to understand how exactly we can see substantial GDP progress if consumers themselves are losing their jobs at a rapid clip or in fear of losing their jobs, both of which obviously cause a complete halt in consumer spending.
But let us say that, despite this fact, we might well see economic growth in the third quarter, especially given the low baseline from which the growth will be measured. This is good news in the abstract to be sure, and the number will give the Obama administration and Democrats some reason to celebrate.
But how exactly can a president take advantage of a macroeconomic number like, say, growth of 1 or 2 percent when he is staring in the face of an unemployment number hovering around 10 percent? Surely, were Obama a Republican, any effort at happy talk would be treated as a sign of being desperately out of touch, only interested in corporate profit, etc. etc. The first President Bush was hammered, and rightly so, when he and his administration attempted to act as though the recession of 1991 was not that big a deal; it wasn’t in historical terms, but a president has to show a greater degree of connection with the electorate than that.
Obama is a Democrat, which will give him greater leeway, and given his standing with the media, a more credulous audience. But if he overplays his hand, he will add to the sense, small but growing, that he doesn’t quite get what is going on in the economy and doesn’t really know how to repair it. Should that sense continue to grow, his agenda will be in jeopardy and so will his party’s dominance.
