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Monday, June 6, 2011

As financial indicators spell trouble for US economy, Obama's re-election is questionable

Official portrait of CEA member Austan Goolsbee.Image via Wikipedia
President Obama administration
officials like Austan Goolsbee (above),
Chief Economic Adviser, continue
 to cite economic tealeaves a
'bump in the road' as financial
markets tend to indicate
otherwise.

A Reach Out Job Search Op/Ed


Two years after the official end of the recession, Friday, June 3rd grim unemployment numbers saw the jobless rate jump to 9.1%. Job growth, has slowed to a crawl, with only 54,000 private sector employment opportunities added in May 2011. There are an estimated 13.9 million jobless Americans, seeking work.


No president since Franklin Delano Roosevelt  (FDR) has won a second term, when the unemployment rate has exceeded 7.2% on election day. 


Take this sobering fact with growing tealeaves of bad economic news: a slowdown in hiring and manufacturing, a decline in consumer confidence, the peak of gas prices and a extremely weak housing market. 


As financial instability overtake consumers pockets and business markets as a whole, chances the U.S. unemployment rate will be under 7 percent next year, would seem slim to none. So, what does this say for President Barack Obama 2012 re-election chances?


To date, the Republican lead House or Democratically controlled Senate, has no plans to stimulate new job creation policies. House GOP leadership recently dropped a "Jobs Plan" the party announced was meant to help business who 'create' employment


Senate leadership haven't made any announcements on initiatives to promote job growth since being sworn into office in January 2012, neither has President Obama. The U.S. Federal Reverse, in a recent statement, noted they're unlikely to do more to fight against unemployment, like cutting interest rates, citing fears of rising inflation.


A growing number of Americans believe cutting federal spending programs is one of the paths to prosperity. Evidence is mounting that some citizens might be correct. Obama's 2009 $800 billion stimulus, which included both the Trouble Asset Relief Program (TARP), Home Affordable Modification Program (HAMP) and a huge private bank bailout, have given President Obama mixed economic results at best.


In the housing market, private banks received monies to help re-stabilize millions of underwater and adjustable rate mortgages. The banks have since resisted attempts to revalue home principal rates. As a result, foreclosures continue to be at a all-time high and home values continue to fall across the country. 


Meanwhile, the unstable housing market, is directly linking to the high rates of unemployment. Morris A. Davis, a former Federal Reserve economist, estimates that as many as a million homeowners slipped into foreclosure because of insufficient help for the unemployed.
“The money was there and they didn’t spend it,” said Mr. Davis, an associate real estate professor at the University of Wisconsin in the New York Times article. “I don’t mean to sound outraged, but I am pretty outraged,” he cited.
Nate Silver, a New York Times' poll and policy analyst, predicts that the unemployment rate will be around 8% come election 2012, exactly the same as when candidate Barack Obama was sworn into office. Obama's odds will be "impaired," says Silver, if economic indicators, including jobs numbers, remain poor. 


Groups including the Nation Employment Law Project (NELP), Economic Policy Institute (EPI) and jobless advocates have stated repeatedly over the past three years since TARP and HAMP, that an FDR administration type re-employment program with Federal government support, coupled with extending jobless benefits for a limited period of time, is needed to return the nations' economy back to prosperity. 

“The clamoring over debt in Washington has distracted us from the far more immediate crisis of high unemployment and a severe jobs shortage. Addressing the urgent crisis the jobs deficit poses is also an important part of the answer to the budget deficit. Restoring opportunity to millions of unemployed and underemployed Americans will rebuild the revenues needed to pay down the debt and bring down deficits", said Christine Owens executive director of NELP in a June 3rd press release. 
"If Congress is not willing to put revenues on the table with tax hikes for the extremely wealthy, then the least it should do is increase revenues by putting America back to work. Affirmatively promoting job creation is the solution that fits America’s problem and fulfills America’s promise of economic opportunity for all,” Owens stated.
President Obama administration so far, has ignored these calls. Obama's Chief economic adviser, Austan Goolsbee, downplayed the disappointing job growth in May as a 'mere bump on the road' to recovery

“There are always bumps on the road to recovery, but the overall trajectory of the economy has improved dramatically over the past two years,” Goolsbee said in a statement posted Friday to the White House blog.
November election 2012 results will tell if Americans voting public will hold Barack Obama at fault for the nation's economic mess, by questioning if he should be re-elected President of the United States, or not.

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