You’ve seen the headlines already, but let’s look a little deeper:
U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a moderate pace, but stronger demand for automobiles softened the blow.
Gross domestic product expanded at a 2.2 percent annual rate, the Commerce Department said on Friday in its advance estimate, moderating from the fourth quarter’s 3 percent rate.
2.2% is not a disaster. It’s about what you’d expect a hot economy to do as it cooled off. It’s been the same with jobs growth. 120,000, 140,000 — not bad, if we’d just enjoyed a year or two of 200,000+ growth each month. Of course, we never got that hot economy. We never got the jobs growth. We never got the big GDP numbers.
As Zero Hedge reminded everyone this morning, “It now takes $2.52 in new debt to raise GDP by $1.00.” That’s unsustainable. And everyone knows it. It’s just that in Washington, they can pretend not to know it, so long as Bernanke keeps doing the ZIRP and the Twist.
Want to hear the really scary part? You probably don’t, but I’m going to tell you anyway. Last quarter’s anemic growth might have been borrowed from the current quarter, thanks to the unseasonably warm weather. I’d look for sub-2% growth perhaps as early as this quarter, but certainly in the second half of the year. That stinks.
Which brings us to the argument Mitt Romney needs to start making. Romney has taken some heat from the right, for talking up the economy, for seeing the silver lining. But he really had no business going negative while the jobs numbers looked OK — you don’t win by talking down a growing economy. Those days are probably over, although we won’t know for sure until next Friday’s jobs report. If it’s another lame one, then Romney needs to switch gears again, and explain to people why Obamanomics has failed. And it’s a simple case to make.
I’ll leave it to the speechwriters to pretty it up, but here’s the bullet-point version.
• The economy bottomed out in Q2 of 2009, before a single Obama policy had taken hold. Not one stimulus dollar had been spent, ObamaCare was still just talk, Dodd-Frank did not exist. Obama did not “save” us from Depression. The recession found its natural bottom without him.
• The economy has been sputtering along that natural bottom ever since. Perky job creation went catatonic with the passage of ObamaCare. Dodd-Frank has enshrined Too Big to Fail while freezing consumer credit. ZIRP is impoverishing the elderly. Stimulus was partisan theft. Quantitative easing has resulted in food & gas inflation which is killing consumers.
• As a result of these policies, we’re on the verge of a double dip recession, which will start with 15% underemployment and 28% of all mortgages underwater. Where’s the natural bottom for that? And with an extra $5,000,000,000,000 in new debt, and interest rates already at zero — what tools does Washington have left to fix it? None.
The image of Obamanomics which Romney needs to sell is this: You take an economy on its back, then stomp the boot of the regulatory state firmly on its throat. You then beat it on the head with a big sack of money. When that fails, get a bigger sack. We’ve tried this for three years now, and yet the economy is still on its back. It’s time to let it breath once more.
That’s a case Romney can make gently, in line with his “He’s a nice guy, but we can’t afford him” approach.
Much will depend on the jobs report next week, but 2.2% growth just can’t generate enough jobs to do Obama any good. Let’s see if Team Romney is up to making the case.
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