Obama More Pessimistic on the Economy, But Not Pessimistic Enough

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“Headwinds” from the first half of 2011 are holding back the recovery, President Obama and his advisers argued on Friday, reacting to an undeniably abysmal June jobs report. While Obama didn’t dismiss the discouraging data as a “bump in the road to recovery” as he did in May, the White House is trying to blame transitory factors such as the natural disaster in Japan and or seasonally high gas prices for the stalled jobs market. But the depth and breadth of the bad news appears to go far beyond those issues.

State and local government job losses that Obama mentioned are no seasonal fluke. The recession drove down receipts and severe austerity at the state level has been necessary to pass balanced budgets. Simply put, temporary census jobs are no longer sufficient to explain cratering public sector employment. This is, by all accounts, a recovery with modest private sector gains accompanied by deep cuts in government jobs:

And private sector gains weren’t even all that good in June. A few things to consider: The unemployment rate didn’t go up in June because there were more people entering the labor force. Terrifyingly, there were far fewer people looking for work. There are 545,000 more unemployed Americans now than there were at the beginning of March.  Only 58.2% of American adults are working. These aren’t signs of “headwinds,” they’re indications of a desperately stalled economy.

Obama’s policy options, as Massimo reports, are basically limited to an infrastructure bank to boost construction projects and payroll tax cut extensions to spur hiring as part of a broader deficit reduction deal. Those constraints can largely be explained by Republican in Congress unwilling to grant him further stimulus spending outside the very narrow scope of tax cuts or, maybe, building a few roads. But Obama has also limited himself. In conflating economic growth with deficit reduction, Obama has robbed himself of the opportunity to make the case for prioritizing one in spite of the other —  further deficit spending to create jobs. Deficit reduction, Obama repeated on Friday, will “put our economy on a stronger and sounder footing for the future.”

Politically, this all presents huge problems for the President’s reelection effort. “The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers.” White House adviser David Plouffe told Bloomberg this week. “People won’t vote based on the unemployment rate, they’re going to vote based on: ‘How do I feel about my own situation?'” Plouffe’s right. The political power of the economy is not tied to any Bureua of Labor Statistics figure; it lies in whether or not Americans feel things are getting better. The message of job numbers from May and June are unequivocal: They’re not.