The Obama Downgrade That Already Happened

July 21, 2011

Startling Number of Economic Experts Downgrade Growth Expectations Following Weak and “Worrisome” Recent Economic News

The San Francisco Federal Reserve downgraded its estimate for U.S. economic growth by 1% Tuesday, citing the recent spate of “worrisome” economic data.
Several other economic experts have similarly issued dismal growth forecasts for the economy over the rest of the year, suggesting a similarly bleak outlook for job creation.
This slew of disappointing economic forecasts is painfully ironic a year after the White House’s so-called “Summer of Recovery.” The weak response from the White House about this recent bad economic news might be better characterized as the “Summer of Excuses.”

BACKGROUND:

The San Francisco Federal Reserve downgraded its estimate for U.S. economic growth by 1% Tuesday, citing the recent spate of “worrisome” economic data:

SAN FRANCISCO FEDERAL RESERVE ANALYST DOWNGRADES GDP GROWTH BY 1%: ” ‘The slow growth of private-sector hiring is especially worrisome given expectations of additional cuts in government employment,’ Daly said.”(Kerri Panchuk, “San Francisco Fed Analyst Sees GDP Growth of 2.6% this Year,” Housing Wire, 7/19/2011)

They weren’t alone. Several other economic experts have similarly issued dismal growth forecasts for the economy over the rest of the year, suggesting a similarly bleak outlook for job creation for the rest of the year:

MACROECONOMIC ADVISERS DOWNGRADES FORECAST BY 1.6%. (Catherine Rampell, “The Great Growth Disappointment,” The New York Times, 7/15/2011)

JP MORGAN: DOWNGRADES BY 0.5%. (Kathleen Madigan, “Weak Growth Is Not Only in Rear-View Mirror,” The Wall Street Journal, 7/18/2011)

GOLDMAN SACHS: DOWNGRADES GROWTH BY 0.75%. (Kathleen Madigan, “Weak Growth Is Not Only in Rear-View Mirror,” The Wall Street Journal, 7/18/2011)

MORE GOLDMAN SACHS: UNEMPLOYMENT TO BOTTOM OUT AT 8.75%?(Kurt Brouwer, “Goldman Sachs Slashes Economic Forecast,” Market Watch, 7/18/2011)

NATIONAL ASSOCIATION OF BUSINESS ECONOMISTS: “SLUGGISH GROWTH” TO “LINGER THROUGH THE REST OF 2011,” ONLY 11% OF ECONOMISTS THINK GROWTH WILL EXCEED 3%: (Jeffrey Bartash, “Business Economists See Softer U.S. Growth,” Market Watch, 7/18/2011)

CONSUMER ELECTRONICS ASSOCIATION: ECONOMY IS “WEAKENING AND THE RECOVERY IS SOFTENING”: (Jeffrey Bartash, “Business Economists See Softer U.S. Growth,” Market Watch, 7/18/2011)

THE BOTTOM LINE: “Even so, 2.5% isn’t great. The U.S. economy cannot rack up impressive growth numbers when its important household sector is beset by worries over deleveraging, falling wealth, and weak jobs prospects.” (Kathleen Madigan, “Weak Growth Is Not Only in Rear-View Mirror,” The Wall Street Journal, 7/18/2011)

This slew of disappointing economic forecasts is painfully ironic a year after the White House’s so-called “Summer of Recovery.” Accordingly, the recent economic message from the White House might be better characterized as the “Summer of Excuses”:

FLASHBACK TO A YEAR AGO: WHITE HOUSE ANNOUNCES “RECOVERY SUMMER.“ (Press Release, “Administration Kicks Off ‘Recovery Summer’ With Groundbreakings and Events Across the Country,” The White House, 6/17/2010)

NOW, OBAMA CLAIMS HE WAS “LARGELY SUCCESSFUL” IN STABILIZING ECONOMY, DESPITE THE FACT THAT “STUBBORN” UNEMPLOYMENT IS FAR ABOVE HIS 8 PERCENT MARKER: “Now, we took very aggressive steps when I first came into office to yank the economy out of a potential Great Depression and stabilize it. And we were largely successful in stabilizing it. But we stabilized it at a level where unemployment is still too high and the economy is not growing fast enough to make up for all the jobs that were lost before I took office and the few months after I took office. So this unemployment rate has been really stubborn.” (“Press Conference by the President,” The White House, 7/11/2011)

TREASURY SEC. TIM GEITHNER SAYS “RIDICULOUS” TO JUDGE OBAMA ON DEBT AND UNEMPLOYMENT. NBC’S DAVID GREGORY: “Talking about what’s good for the economy, a lot of this discussion about debt is ultimately to free up space for jobs to be created. It’s not happening. People are still out of work. Here’s the chart of the President’s economic record. This is based on government information, Treasury Department, U.S. Bureau Of Labor Stats – unemployment 7.3% on Inauguration Day, up to 9.2%. with latest report, up 26%. You see the debt figures up 35%.” SEC. GEITHNER: “David, let me just say, that’s a ridiculous table.” (NBC’s “Meet the Press”, 7/10/2011)

WHITE HOUSE CHIEF OF STAFF BILL DALEY SAYS THE “POLITICAL SYSTEM” IS TO BLAME FOR WEAK ECONOMY: “I do firmly believe that one of the wet blankets on this economy and on companies, on the system right now, is a question as to whether or not our political system, whether the leaders can get together, whether they can solve big problems or they’re going to just kick the can.” (Imtiyaz Delawala, “Bill Daley: President Obama Still Wants a ‘Big Deal’ on Deficit Reduction,” ABC’s “This Week”, 7/10/2011)

OBAMA ADVISOR DAVID PLOUFFE PRE-EMPTS JOBS REPORT, CLAIMS “VISION” MORE IMPORTANT THAN JOBS: ” ‘People won’t vote based on the unemployment rate, they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’ … Plouffe said what voters really want is ‘vision.’ ” (Julie Mason, “Plouffe: It’s About Vision, Not Jobs,” Politico, 7/8/2011)

OBAMA CLAIMED “WE’VE ALWAYS KNOWN THAT WE’D HAVE UPS AND DOWNS.” (“Remarks by the President on the Monthly Jobs Report,” The White House, 7/8/2011)

AFTER HE SAID HIGH UNEMPLOYMENT NOT A PROBLEM BECAUSE THERE ARE ALWAYS “BUMPS ON THE ROAD.” (“Remarks by the President to Chrysler Workers in Toledo, Ohio,” The White House, 6/3/2011)

A PHRASE ECHOED BY OBAMA’S TOP ECONOMIC ADVISOR: ” ‘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.” (Alexander Bolton, “Obama’s Economic Chief Says Job Numbers Are A Bump in the Road,” The Hill, 6/3/2011