Last Friday the Bureau of Economic Analysis reported that the Goss Domestic Product (GDP) in the U.S. grew at a rate of 1.5% for Q2 and revised Q1 from 1.9% to 2.0%. In basic terms the GDP is the value of goods and services produced within a country. It is a valuable measure that provides a snapshot of the country’s economic health, which could be good or bad. Friday’s number was one that portrayed a slowing economy leading up to the Presidential Election. Bottom line, the 1.5% number represents an opportunity for the Republicans and a possible pitfall for the Democrats.
Offense – Republicans
Mitt Romney can latch on to this topic and rip into efforts like the American Recovery and Reinvestment Act of 2009 (ARRA) that showcase the Obama Administration’s failure to get the country on a true economic growth path. With only 80,000 jobs created in June and national unemployment at 8.2%, the Republicans have platform to leverage. In addition, the latest manufacturing numbers indicate that this sector is contracting, which could be a key factor in states like Ohio and Michigan. The Republicans can do two things to capitalize on the slow growth numbers. First, they can bash the Democratic Party for sub-par efforts such as ARRA. Second, they can come up with a job creation program that will draw private investment into the mix. However, they must craft legislation that makes it compelling for the private sector to invest in programs that will create new long-term well-paying jobs. Not an easy task, but the Republicans need to be forward thinking if they want to win on November 6.
Defense – Democrats
There is little question that Democrats are worried that the economy is slowing at a time leading up to Election Day. Friday’s number has put the Obama Administration on its heels in no uncertain terms. Rather than boast, the Democrats must play defense and try to substantiate their growth policies. To their credit a 8.2% national unemployment rate is far better than 10%, but America still has over 13 million currently unemployed. The one saving grace may be oil prices, which are hovering around $90 per-barrel. This could keep growth in the third quarter at approximately the same level as the second, which would be a boon for the Democrats. In any event, because no major job creation legislation can be passed before Election Day the Democrats are in-between a rock and hard place.
This week we will get the July unemployment number, which should come-in at about 100,000 jobs created at an 8.3% rate. These numbers will be almost a mirror image of June, which means more of the same. As a result, the Republicans will be a able to build a stronger business case and put more of a negative spin on the Democrats economic growth policies. In a nutshell, slowing growth as evidenced by Friday’s GDP number will make for a very close race come Election Day.