The new GDP figures released yesterday largely slipped under Wall Street’s radar from some reason as stocks soared because of other news largely related to Europe. Yet, there had to be some sober moments at the White House where yesterday’s figures could spell a likely failure for President Obama’s bid to be re-elected.
Economic growth slowed to just 1.5% in the latest quarter, far below the claimed 3% growth that White House economists had claimed. Historically, any growth below 2% usually indicates a coming recession, meaning that the economy isn’t improving under this administration, and also spelling a likely defeat for the president in November, because no president has ever been re-elected with such poor economic figures as this.
And this sign is also showing up in polling numbers between Obama and challenger Mitt Romney as well. Despite a week of gaffes and blunders by Romney, such as the Olympic controversy that Romney created in London, he either runs even or ahead of President Obama right now.
But, even though the bad economic news isn’t good for the president, it’s probably even worse for the American business community to hear, as consumers are already cutting back on food and other essentials and eating less or spending less than the rate of inflation, meaning a real overall drop in actual sales.
Many businesses will fail under the new recession, also meaning many lost jobs as well. And conditions such as the worst drought since 1956 will only mean less available groceries for sale at higher prices. And the slowing economic situation in both China and India could also potentially mean even worse economic waves for the U.S. economy than what problems the smaller economies in Greece and Spain have done to the U.S. economy.
A further wild card is the possibility of open warfare between Israel or Iran after the Olympics as Israel could retaliate for the Iran-backed terrorist bus bombing in Bulgaria. These two countries have been involved in a low scale war for some time now, where Israel could step up the combat to levels far higher than killing some Iranian nuclear scientists. Such open warfare could choke off the Strait Of Hormuz oil supply if Iran would mine the waters to punish the West for their support of Israel. Iran could also prove more desperate as their ally in Syria faces increased rebel threats as well, and Iran could move to keep their ally in power.
Right now, there is little reason to be optimistic about the U.S. economy. Every important indicator doesn’t bode well for business or for Mr. Obama.