An economy stuck in the doldrums

The outlook for the American economy darkened, as the latest jobs report showed it settling into a prolonged stagnation.

What happened

The outlook for the American economy darkened this week, as the latest jobs report showed it settling into a prolonged stagnation. The economy added only 80,000 jobs in June, beneath analysts’ expectations, and the unemployment rate remained at 8.2 percent for a second straight month. Only 225,000 jobs were created in the second quarter of 2012, compared with 697,000 jobs in the first three months of the year. Economists now say the unemployment rate is unlikely to dip below 8 percent by November, presenting a serious threat to President Obama’s re-election. Obama attempted to put a positive spin on the numbers, saying he inherited the worst economy since the Great Depression, and that private sector businesses had made “steady progress” on his watch, adding 4.4 million jobs over the past 28 months. “We’ve got to grow the economy even faster, and we’ve got to put even more people back to work,” he said.

Republican presidential nominee Mitt Romney called the jobs report a “kick in the gut” for Americans. “We’ve looked at almost, now, four years of policies that have not gotten Americans working again,” he said. Romney said that, if elected in November, he would create jobs by expanding domestic energy production and cutting the corporate tax rate.

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What the editorials said

“The Obama recovery is sputtering like a limp balloon,” said the New York Daily News, but the president is sticking to his “out-of-touch, glass-half-full message.” Blaming his predecessor and congressional Republicans is “spin,” and voters see right through it. It’s Obama’s job “to lead us out of the doldrums.” Our suggestion? said A short-term stimulus package, perhaps with a temporary tax rebate, and a long-term proposal to lower the deficit and show investors that “the U.S. is serious about resolving its bloated budget.”

Try getting that past Congress, said The New York Times. Obama last year proposed a new, $447 billion stimulus package that would have created up to 1.9 million jobs through state aid, infrastructure spending, and tax breaks for new hiring. But obstructionist Republicans blocked it, having figured out that “the weak economy is their best shot at victory in November.” Since the GOP remains opposed to anything that would actually help the economy, “there is virtually no chance for change in the months ahead.”

What the columnists said

The real obstruction to our economic recovery, said Larry Kudlow in, is Obama himself. All the last round of stimulus spending and bailouts achieved was a recovery that “ranks dead last in modern times”—with feeble GDP growth of just 6.7 percent since the recession ended, compared with 17.6 percent at the same stage during the Reagan recovery. At least this won’t go on much longer. With jobs numbers like these, “Obama’s goose may already be cooked.”

It’s way too early to tell, said Scott Clement in All the polling evidence suggests that voters pay little attention to monthly jobs reports. After the abysmal May jobs report, Obama’s economic job approval “hardly moved at all,” and neither did his numbers against Romney. A decimal-point change in the unemployment rate won’t sway undecided voters, said Jesse Singal in They’ll judge the economy by what’s going on around them. “Are their friends and neighbors getting hired? Are they getting raises?” It’s by these metrics that they’ll decide Obama’s fate.

“The real political test comes after Labor Day,” said Robert Reich in During the summer, as Americans enjoy vacations and the outdoors, they aren’t focused on politics. But if the economy resumes moving in the right direction in September and October, “Obama has a good chance of being re-elected.” If we remain mired in the doldrums, he’ll be a one-term president. Ronald Reagan’s re-election victory in 1984 is a good yardstick, said Chris Cillizza in A deep recession had ended in 1982, but in November 1984, unemployment still stood at 7.4 percent. Fortunately for Reagan, the rate was “moving in the right direction by Election Day.” To pull off Reagan’s trick, “Obama needs another downward dip” in the unemployment rate—“and he needs it soon.”

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