The July 2012 Unemployment Rate Rising To 8.3 Percent Is More Economic Bad News For The Obama Administration:
Nonfarm payrolls increased 163,000 in July but even though this number is better than the last two months combined, it still spells disaster for the Obama administration as the unemployment rate rose from 8.2 to 8.3 percent. The U.S. economy has been too weak – too long. The monthly increase in unemployment could be revised downward and barely eclipsed the labor force participation rate which declined by 150,000 workers. Increasing jobs at a slow pace won’t give potential voters the feeling the economy is much better off than four years ago and Romney will make the case that another 4 years of this sluggish growth would have long term consequences for the U.S. economy. The eligible working population is growing faster than the jobs rate and if prolonged, this could mean a generation of unemployed people in the next few years.
GDP numbers released recently show the U.S. economy is off track and there could be even more negative headlines right through November 2012. GDP for the second quarter was a dismal 1.5 percent, much lower than the 2 percent first half of the year. The housing market is still under pressure and income growth isn’t keeping up with inflation.
President Obama is relying on the old adage, “what if” and Mitt Romney will be working to show voters “what is”. President Obama’s own words will be useful when Mitt Romney’s ads show his promises regarding the economy weren’t kept. President Obama is ignoring the “fiscal cliff” which has caused businesses to cut back on spending, hiring and purchasing new equipment until after November, but 3 years of possible government shutdowns makes this uncertainty – commonplace among investors.
The increased prices for corn may kick in right before the elections and if unemployment continues to slack and disposable incomes remain tight, Romney’s chances increase considerably. Mitt Romney already has a lead on President Obama in terms of who voters think can fix the broken U.S. economy and Bain Capital/wealth attacks may be losing their efficacy. The poor economic numbers are making the race closer than anyone may have anticipated just a few short months ago when Republicans believed they may need to focus on social issues as the economy seemed to be getting stronger. On Friday, bets that Mitt Romney could win the election increased after the poor jobs number was unveiled. Although Romney is still behind decisively according to some online betting parlors, the rate of change for these predictions can turn quickly or be wrong as Obama found out when he was slated to lose to Hillary Clinton. It’s similar to a short squeeze.