The White House Office of Management and Budget recently published its Mid-Session Review based on the most recent economic data. The MSR shows OMB’s economic growth outlook moving steadily downward from the earlier February report, and the numbers are a red flag for the economy and the President’s re-election.
As a result of recent slower growth in the first two quarters, the OMB’s alternative forecast projects unemployment will remain at 9 percent in 2012. The alternative forecast is based on slightly lower GDP growth rates than those assumed for the base MSR forecast. OMB’s base MSR forecast predicts unemployment will drop to 8.3 percent during 2012.
The alternative forecast, shown in Table 4, is an update of the projection based on information available through late August Since June, there have been significant changes to the economic outlook, including the annual revision of the NIP A which showed a large downward adjustment in growth in the first quarter, a subsequent downward revision of growth in the second quarter, and other economic indicators suggesting slower growth than originally projected in the second half.
If the OMB alternative forecast turns out to be correct and unemployment remains at roughly 9 percent going into November 2012, the Obama re-election campaign is doomed. There is no way to spin extremely slow growth and persistent and unacceptably high unemployment.
The American people already strongly disapprove of Obama’s handling of economic issues, it is highly unlikely the voters would give Obama another four years if the jobs market remains this bad for another year.
What the Obama campaign needs is the same thing the American people need: a lot more jobs. It is hard to picture anything else that could save Obama’s campaign if these forecasts end up accurate.