Analysis: Obama’s recovery summer can’t shake discontent

By Emily Kaiser and Caren Bohan

WASHINGTON (BestGrowthStock) – The White House is trumpeting a “summer of economic recovery,” but it could soon be facing a winter of discontent.

President Barack Obama, Vice President Joseph Biden and other officials have visited far-flung locales such as Holland, Michigan, Louisville, Kentucky, and Barre, Vermont, to see first-hand some of the projects financed by an $862 billion stimulus package passed last year.

While economists generally agree the recession would have been worse without the government spending spree, it’s a hard sell to voters with unemployment at 9.5 percent and unlikely to fall much by November’s congressional elections.

“I think it’s a very risky strategy to use the term ‘recovery’ and the promise and claim of recovery when for many Americans, the evidence is simply not there,” said Julian Zelizer, a history professor at Princeton University.

White House officials are trying to frame the mid-term elections as a choice between Republicans, whose policies the administration says caused the economic mess, and Democrats, who are trying to dig the country out.

Dana Milbank, a Washington Post columnist, pointed out this wasn’t exactly the stuff of catchy bumper sticker slogans. “Vote Democratic. Things might have been even worse without us” probably won’t sway voters, he wrote.

CREATED OR SAVED?

The recovery theme cropped up often in the administration’s recent tours of taxpayer-funded projects.

“This summer is sure to be a Summer of Economic Recovery,” Ron Sims, deputy secretary of Housing and Urban Development, wrote on the White House blog last month after visiting a senior citizen apartment complex being built in Baltimore.

The White House says the “Recovery Summer” slogan was not a promise that unemployment would fall rapidly. Rather, it was intended to draw attention to the variety of stimulus-funded projects that were now up and running.

“We understand that we aren’t always going to get credit for digging us out of a ditch until we’re out of the ditch,” said White House deputy communications director Jen Psaki.

“What we have to keep our focus on is telling people what we are doing and talking about the success of the clean-energy projects and the battery investments and the small businesses that are working again,” she said.

Projects funded by the stimulus are beginning to “really ramp up,” Biden told the ABC program “This Week.”

“We have two, three times as many highway projects going. We have significant investment in broadband for the first time now,” Biden said.

The upbeat message doesn’t seem to be resonating. Consumer confidence is weakening with less than four months to go until the congressional elections.

The Thomson Reuters/University of Michigan’s consumer sentiment index released on Friday sank to its lowest level in 11 months in July, a much steeper decline than economists had predicted.

The survey’s gauge of consumer expectations slid to the lowest level since March 2009, when stock markets were at their weakest point of the recession amid fears of another Great Depression.

“This is bad news, clearly,” said Jennifer Lee, senior economist at BMO Capital Markets. “We need job growth now more than ever.”

Indeed, the poor job market lies at the heart of public dissatisfaction with Obama’s handling of the economy.

The administration did not do itself any favors when it released a report on Wednesday saying the stimulus package created or saved millions of jobs.

“Does the White House really think we are buying that unicorn poop?” was one reader’s comment on reuters.com.

ROSY SCENARIO PARTLY RIGHT

Republicans pounced on the report at a congressional hearing on Wednesday with White House economic adviser Christina Romer. They pointed out that Romer had co-authored a paper, released in January 2009, predicting that stimulus spending would cap the jobless rate at 8 percent.

In fact, unemployment peaked at 10.1 percent last October.

Romer said that forecast error stemmed from a steeper-than-expected drop in economic activity in late 2008 and early 2009 and was not an indication the stimulus failed.

“Before the stimulus could have done anything, the economy deteriorated rapidly,” she said.

While her employment target was off, Romer’s 2010 economic growth forecast — which earned her the derisive nickname “Rosy Scenario” among those who thought she was wildly optimistic — has proved accurate.

Back in February 2009, when Obama presented his first budget proposal, the administration’s forecast called for 2010 growth of 3.2 percent. At the time the “Blue Chip” consensus of leading economists was just 2.1 percent. Those forecasts have since come up and are now in line with the White House’s view.

Unfortunately for the White House, the economy is still not creating enough jobs to make much of a dent in the unemployment rate.

(Editing by Paul Simao)

Analysis: Obama’s recovery summer can’t shake discontent