Friday, January 6, 2012

The Slow Climb Back from the Abyss


The news that the economy added over 200,000 jobs last month and that the unemployment rate dropped to a three-year low of 8.5% was certainly music to the ears of an awful lot of people, especially the people who reside at 1600 Pennsylvania Avenue.  Even more encouraging was that most of the jobs added were the non-seasonal / permanent kind, meaning they are not likely to go away after the holidays.  In fact all major industries posted significant gains with transportation and manufacturing leading the way with 50,000 and 23,000 jobs respectively.

All indications point to a recovery that is finally gaining some consistent momentum.  The economy added 1.6 million jobs in 2011, compared to 944,000 in 2010; the unemployment rate averaged 8.9% in 2011, down from an average of 9.6% the previous year.  While not all the news was rosy – housing continues to be a drag on the economy and will be a problem for the foreseeable future – the prognosis is considerably more optimistic than even a few months ago.  Those double-dip woes have all but vanished along with the doomsayers who kept predicting hyper-inflation and a stock market crash.  And while most economists don’t believe the unemployment rate will drop below that supposed Mason/Dixon line of 8%, all but the most conservative predict steady growth for 2012, with many forecasting a net gain of 2.1 million jobs.

While critics of the Obama Administration will point out that no president has ever been reelected with unemployment at or over 8%, the real determinant factor will more likely be the direction the economy is heading.  If things appear to be trending upwards then prospects for a second term improve.  Ronald Reagan was reelected in a landslide in 1984, even with unemployment at 7.2%, largely because the economy was perceived by voters as moving forward.  If Obama can make the case that even though unemployment is high, the nation is on the right track, he will defeat whomever the Republicans pick as their nominee.

And that is why the Right is starting to sweat.  Despite all the outward signs that the economy is improving, most conservatives and virtually all Republicans are doing their best to downplay the news.  Up until about September of last year they were succeeding in portraying Obama as the Grim Reaper.  But now there’s no denying it anymore. No matter how much they poo-poo the forecasts, the simple truth is that things are improving slowly but surely, with virtually no help from the GOP.

To make matters worse for them, the voters are slowly coming around and figuring out the charade.  Obama’s approval numbers, while still below 50%, are significantly better than congressional Republicans.  He is winning this war, battle by battle.  He appears to have the upper hand and he is playing it.  More and more the Republicans are being viewed as obstructionists among the electorate.  In a surprising twist of fate, most voters now say they trust the Administration on the economy over the GOP.  Talk about the tide turning.

While we’re still a long way off from November – the Dow Jones and the S&P 500 have basically been flat now for almost a year, and the Euro crisis is far from over – the nation can finally begin to see a light at the end of this long, dark tunnel; a light that hopefully doesn’t belong to a another train.  

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