Wall Street pessimistic about economic growth, Carville warns Obama
With the economy still struggle to keep up the pace, James Pethokoukis notes that Wall Street is cutting growth forecasts for the year, further adding to worries that we may be heading into yet another recession:
Back in August 2010, Treasury Secretary Timothy Geithner wrote the following New York Times op-ed: ” … a review of recent data on the American economy shows that we are on a path back to growth.”
The piece was titled ”Welcome to the Recovery.”
And, indeed, the White House thought the economy had shifted into high gear. GDP had expanded at an average pace of 3.8% over the previous three quarters. And the road ahead looked just as promising. In the Economic Report of the President in February of that year, the Obama economic teams predicted the economy would grow 4.3% in 2011, 4.3% in 2012, 4.2% in 2013 and 3.9% in 2014. Welcome to the Boom.
But Geithner and the White House economic team were dead wrong. In the seven quarters since, the U.S. economy has grown at an average annual clip of just 2.1%, including just 1.7% last year.
And right now, 2012 looks like more of the same. GDP expanded at a mere 1.9% pace in the first quarter.
And after a weak retail sales number today, Wall Street economists have been slashing their second-quarter GDP forecasts:
– Goldman Sachs cut its forecast to 1.6% from 1.8%.
– Bank of America/Merrill Lynch cut its forecast to 1.9% from 2.4%.
– Macroeconomic Advisers cut its forecast to 1.8% from 2.0%.
– CIBC World Markets cut its forecast to 2.0% from 2.3%.
– Barclays Capital cut its forecast to 1.8% from 2.1%
– Action Economics cut its forecast to 1.8% from 2.0%.
This is bad news for all of us given that unemployment is still high and there other very notable signs that the economy running at a snail’s pace, but it’s even more troubling for President Obama, who is seeing his numbers decline with bad economic news. However, recent polling shows that 56% of independent voters oppose his economic plan.
Obama will still try to use the economy during his campaign. He’ll be in Cleveland, Ohio today where he hopes reboot his message. However, James Carville, who served as a political adviser to President Bill Clinton, warns that contining to talk about what has been done with economy is a mistake:
“I’m worried that when the White House or the campaign talks about the progress that’s being made, people take that as a signal that they think that things are fine and people don’t feel they ought to believe that,” the Democratic strategist said on ABC’s “Good Morning America.”
On how the president should fine tune his rhetoric if he wins a second term, Carville noted that the American people “want to be reassured of him that he understands the depth of the problem and that he has a plan to deal with the deterioration of the middle class.”
The veteran strategist’s latest remarks touch on similar concerns raised in a research document co-written with pollsters Stan Greenberg and Erica Seifert for Democracy Corps.
The three strategists warned on Tuesday in the memo that the Democratic Party could face an “impossible headwind in November” unless it adopts a more forward-looking economic message that focuses on the middle class, and called on the president to start spreading his message with “minimal discussion of the recovery and jobs created and maximal empathy for the challenges people face.”
“These voters are not convinced that we are headed in the right direction,” they wrote. “They are living in a new economy — and there is no conceivable recovery in the year ahead that will change the view of the new state of the country.”
The document continued, “They actually have a very realistic view of the long road back and the struggles of the middle class — and the current narrative about progress just misses the opportunity to connect and point forward. While we hear some optimism, this is framed mostly by the sense that this has to be rock bottom.”
Carville believes that Obama needs to talk about what he is “going to do” not what he has done. That sort of optimistic approach may sound good, but unless there is significant improvement in the economy over the next four-plus months; voters aren’t going to listen. Many are probably already asking themselves about the promises made over the last three years — two of which came with a Democratic Congress, wondering why they should think another term will be any better.