Writing at AEI, James Pethokoukis looks at the downward revision of the GDP number from 1.7% to 1.3% and worries that “U.S. economic growth is dangerously slow.”
I’ve frequently written about research from the Fed which finds that since 1947, when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.
Citigroup has also taken a shot at determining the stall speed: “Specifically, when U.S. growth has cut below 1½ percent on a rolling four-quarter basis, it has tended to fall by nearly 3 percentage points over the following four quarters, and the economy has typically entered recession.
Bottom line: Growth the past two quarters has averaged about 1.6%. Not only does this mean the economy is growing more slowly than last year’s 1.8%, it is also slow enough to signal about a 50% chance of a recession within a year. And the third quarter also looks weak.
The anemic, three-year-old U.S. recovery is already running out of steam. And if it does, it may be several more years before we see unemployment below 8%.
Can Obama blame a second recession on Bush? Sure he can and probably will. The startling lack of good economic news recently — even the dismal housing numbers which have been trumpeted as proof that housing is “recovering” — don’t appear to be having much effect on the race. It seems that voters have either made up their minds that Obama is mostly blameless for the lousy economy or simply believe that Romney is an unacceptable alternative.
The Obama campaign has been relentless in defining Romney as a combination Scrooge and Babbitt. Romney has not done enough to push back against this characterization, although he has just released what appears to be a very effective ad where, for the first time, he talks directly into the camera about his concern for the poor and middle class.
But where Romney must make his mark is in the first debate next week. He won’t get a second chance.
“It seems that voters have either made up their minds that Obama is mostly blameless for the lousy economy or simply believe that Romney is an unacceptable alternative.”
Rick, where are you getting this info?
I think Rick may have a good point. Romney and Republicans are battling a powerful ingrained narrative that Republicans cause recessions and depressions – a Big Lie if ever there was one. This narrative is not universally accepted, but the second point is that a survey a few months ago had Americans thinking that Romney could do no more for the economy than Obama. You and I both know this is nonsense and ignorance, but that is what a lot of people think. American common sense has been seriously battered in recent decades. To compound the problem many people may be settling into the idea that 7+% unemployment will be the “new normal.” Keep in mind that prior to Reagan, that was the case, along with inflation and heavy government regulation — people accepted it. We will find out Nov. 6 if enough Americans snap out of this stupidity.
All I know is I’m voting Romney and straight GOP ticket and even sending money. Romney is my “Anybody but Obama” candidate. I have no use for defeatist whiners who claim there’s no difference between the two choices, and say they’re going to sit this out. I did not make the above points to sow discouragement — I simply understand the landscape.
You’re right about the narrative that Republicans caused this recession. Obama is constantly allowed to blithely blame Republicans, while he himself was part of the problem with suing banks into giving mortgages to people who had no chance in hell of ever repaying. Franklin Raines, Jamie Gorelick, Christopher Dodd and Barney Frank are just a few of the names that need to be exposed for their contributions to the home loan crisis that tanked the economy. NONE of these people are being held responsible. Bush may not have pursued this enough, and a frank discussion can be held regarding that, but Democrats and their idiotic economic ideas need to be held responsible for their contributions to our current morass. Instead, though, this is never addressed, so the generally clueless and disengaged voter is swayed by blaming the rich for not paying enough taxes. And, speaking of the rich, it’s now supposed to be patriotic to remove investment capital from the economy and put it into the government to pay for government redistribution we don’t need.
We simply must expose these liars at every turn.
It’s more than that Republicans cause recessions, it’s that Republicans approve of recessions, or at least accept recessions, even if they don’t simply write-off and laugh at the 47% or the 99% who might actually suffer in recessions.
Romney, with his I’m-not-Obama campaign, has not particulary answered these or any other allegations, no matter how looney. Typical, indeed archetypal, RINO campaign. Not that it can’t work or even won’t work, but it’s almost a caricature of how a fat-ass entitled (!) Republican, would run a campaign.
We get rumbles now that he will reply to these in the debates, and that it has been up to now an effective (!?) rope-a-dope campaign on Obambus. Perhaps. Or perhaps it’s a genius (not) campaign that will finally make people forget about the Giuliani misfire in the 2008 primaries.
We
Shall
See
– water is wet.
Hope ‘n Change, baby! (But it has to be Bush’s fault! Vote Demo-rat in Nov for more!)
Though the Community Reinvestment Act started under Clinton, it took the Obama types of community organizers, and ACORN lawsuits to literally force banks to make unsustainable mortgage loans. Goldman Sachs then created the collateralized mortgage/debt obligation instruments (CMO/CDO) enabling banks and the Fannie/Freddie to bundle the underperforming mortgages with the good mortgages and sell them off as legitimate investments, even insuring them with bogus policies. The banks found themselves with huge profits, but in an unsustainable market. The chickens came home to roost in the last two years of Bush’s presidency, because once dems took over congress, they pushed the no responsibility loans even harder. Raines, Gorelick, Dodd, Frank all were complicit in pushing the unsustainable loans causing the crash, but as Bush was in office it was an easy media effort to blame Bush, and it fit their narrative. Bush repeatedly tried to rein in the practice, but was repeatedly shot down with public pronouncements of his “meanness” “coldheartedness” and with Barney Frank and his ilk insisting that both Fanny and Freddy were on sound financial footings. The “policies” were devised and pushed by dems, who now blame Bush for driving the car into the ditch. Anyone with their head not in the sand can see what drove us into crisis. Yet that doesn’t fit the media narrative.
He can blame Bush? How? Bush isn’t responsible for any of this. The housing bubble was caused by 30 years of policy…Community Reinvestment Act under Carter, F&F pushing lending standards lower and buying up too many mortgages, Financial Services Modernization Act signed by Clinton, etc.
Bush warned Congress for years to do something about Fannie & Freddie, and Congress did nothing. Democrats like Barney Frank said everything was fine.
Want to talk deregulation? The Financial Services Modernization Act is what allowed banks, mortgage companies, insurance companies, and investment houses to all get in bed with each other. But nobody talks about that.
Go to YouTube and look up “Byron Dorgan’s crystal ball” and “Democrats were warned of financial crisis and did nothing”. How could Dorgan predict everything in 1999 if it was Bush’s fault? Geez, man, so many ignorant people in this country who regurgitate nonsense from the left, without having any clue what really happened or what is really happening.