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Obama declares: ‘We tried our plan -- and it worked"

Is this out of touch? From Obama's speech in Oakland, California on July 24, 2012:

But here’s the problem -- we tried that and it didn’t work. (Applause.) It’s not what you believe, it’s not what I believe, it’s not what most Americans believe will actually make a difference. This country was not built from the top down; it was built from the middle class out, from the bottom up. (Applause.) That’s how we became the most prosperous nation in the history of the world. That’s the path that you can choose for America in this election. And that’s why I’m running for a second term as President of the United States. . . .

Just like we’ve tried their plan, we tried our plan -- and it worked. That’s the difference. (Applause.) That’s the choice in this election. That’s why I’m running for a second term.

When the American auto industry was on the brink of collapse, more than 1 million jobs were on the line, Governor Romney said, we should just "let Detroit go bankrupt." . . .

Evidence of a recession coming?

Economy stimulus

This is depressing. From CNBC:

. . . Estimates for the third and fourth quarters have been dropped to levels not seen since the days of the 2008 financial crisis, below even the muted 2 percent expected level of inflation.
That's an ominous recession sign for an economy that has barely managed to attain positive growth this year even with the strong level of earnings beats, according to an analysis by Nicholas Colas, chief market strategist at ConvergEx in New York.
"Revenue estimates for the back half of 2012 have been slowly working their way lower this year," Colas said. "This trend, however, has accelerated to the downside over the past 30 days and we are fast approaching levels where these estimates are unambiguously pointing to the risk of a U.S./global recession later into 2012 and 2013." . . .

Jobs picture stalling in 10 battleground states

Economy Obama2012 stimulus unemployment

From the WSJ:

The data confirm job growth has sputtered in these states since the winter's brisk pace of job growth. . .

The basic numbers:

Unemployment rose in June in six of 10 battleground states that could play a pivotal role in the presidential election, reflecting job cuts in some cases and weak payroll growth in others. The jobless rate climbed a 10th of a percentage point last month in Michigan, Pennsylvania, Colorado, Iowa, New Hampshire and Virginia, the Labor Department said in a report released Friday. The rate held steady in three other battleground states—Nevada, Florida, and North Carolina. Ohio was the only battleground state where unemployment fell last month. Nevada's 11.6% jobless rate remained the highest of any state in the nation. The rates in North Carolina, at 9.4%, Michigan, at 8.6%, and Florida, also at 8.6%, remained stuck above the national average of 8.2%. Joblessness was far below the national rate in three of the battleground states—Virginia, with 5.7%; Iowa with 5.2%; and New Hampshire, with 5.1%. Employers cut jobs in Colorado, Iowa, Michigan and Nevada. . . .

Merrill Lynch predicts 2Q GDP at horrid 1.1% annual rate

Economy GDP stimulus

Calculated Risk has this from Merrill Lynch:

Today’s weak retail sales report leaves Q2 GDP tracking a meager 1.1%. We expect the economy to remain weak through the rest of the year with growth of only 1.3% in Q3 and 1.0% in Q4. This translates to GDP growth of only 1.3% Q4/Q4, significantly below the Fed’s forecast of 1.9-2.4%.

Lower sales, higher inventories, falling interest rates, all point to a slowing economy. From Reuters:

U.S. retail sales fell in June for the third straight month, the longest run of consecutive drops since 2008 when the country was mired in recession. Sales slipped 0.5 percent, with declines across a wide swath of industries from electronics and cars to building supplies, the Commerce Department said on Monday. Analysts had expected a small increase. "Evidence is increasingly clear that the U.S. economy is slowing," said Jim Baird, an investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan. The report adds to a spate of soft economic data that is raising pressure on President Barack Obama ahead of his November re-election bid. Republican challenger Mitt Romney is focusing his campaign on the weak economy, which has plagued Obama's presidency. The dollar declined against the euro and the yield on 10-year U.S. government bonds dropped to an all-time low as the data stoked worries the economy was floundering and could need more help from the Federal Reserve. U.S. stock prices san k. . . .

The JP Morgan forecast is here.

This morning we lowered our tracking of Q2 GDP growth from 1.7% to 1.4%. For some time now we have noted that our Q3 GDP call — which was already below consensus at 2.0% — had risks that were skewed to the downside. . . .

UPDATE: Economists Expect Growth in Second Quarter Was Weak 1.2%

Economists surveyed by Dow Jones Newswires expect real GDP to have grown at an annual rate of just 1.2% last quarter, down from the tepid 1.9% in the first quarter. The expected rate would be the slowest growth since 0.4% posted in the first quarter of 2011. . . .

UPDATE: Computer sales keep dropping.

"For the first time since 2001, client PC shipments have declined sequentially for three consecutive quarters-and have been below historical averages for the last seven quarters," AMD CEO Rory Read said during the chip supplier's second quarter earnings conference call. . . .

"Economists less optimistic as early 2012 gains wither"

stimulus unemployment

Another summer of recovery lost. From Fox News:

Economists say the sales and profit gains of early this year are disappearing, and they are increasingly pessimistic about short-term growth.
They also are gloomy because of the potential impact in the U.S. from Europe's financial crisis, the possible expiration of the Bush tax cuts in December, and the prospect of major cuts in federal spending.
A survey by the National Association for Business Economics released Monday also found less evidence of hiring, confirming the trend in recent monthly jobs reports from the government.
In the quarterly survey of 67 economists who work for companies or industry trade groups, 22 percent reported rising employment in July, down from about 30 percent in the last three surveys and 42 percent a year ago. On the positive side, only 9 percent said employment was falling. The rest said it was unchanged.
Just 39 percent of the economists surveyed reported rising sales at their companies in July, down from 60 percent in April. There was a similar trend on corporate profit margins, with 29 percent reporting rising margins in July, compared with 40 percent in April.
"The survey results suggest worsening economic conditions," said Nayantara Hensel, a business professor at National Defense University who analyzed the results for NABE. "The rising sales and profit margins experienced earlier in the year may have been short-lived." . . .

Op-ed at RealClearMarkets: Austerity Works: It's Time to Give It a Try

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This piece is with my son Sherwin. The graphs are pretty powerful. The piece starts this way:

Austerity or growth, is that the choice facing Americans and others around the world?
The debate never seems to abate. European Union finance ministers last week gave Spain permission to delay cutting some government spending and reducing its deficit, though many such as The Economist magazine fear that even the cuts that will be made go too far. A similar decision may soon have to be made for Greece. Even though the pro-bailout parties won the June Parliamentary election, they too are asking for a two-year delay in cutting spending and reducing their budget deficit.
The Obama administration has put increasing pressure on German Chancellor Angela Merkel to ease up on Germany's austerity prescription. President Obama continually touts more government spending as the cure, and derided Republican "let's cut more" spending strategy as the cause of Europe's economic problems.
Last month, German Finance Minister Wolfgang Schäuble was having none of it, telling Obama to fix the U.S. deficit before giving Europe advice: "Herr Obama should above all deal with the reduction of the American deficit. That is higher than that in the euro zone." . . .

Washington, DC becomes known as the "recession-proof" city

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Obama has certainly achieved a remarkable recovery in one US city, and it is probably safe to say that his policies of massive government spending did make a difference here. Taking money from the rest of the country and moving it to Washington, DC certainly did help the local economy, though at the expense of everyone else. From Fox News:

The City Hall corruption comes amid years of prosperity in which the nation’s capital became known as a nearly recession-proof city and a preferred market for such celebrity chefs and restaurateurs as Mike Issabella.
The changes mark a long road of success since the 1990s -- when the city, in part because of the crack epidemic, became known as “the murder capital.” Today the murder rate is at a roughly 40-year low. . . .

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