The Campaign Spot

When Does It Become Obama’s Economy?

Clip and save this James Pethokoukis item from U.S. News and World Report on “Why Obama Will ‘Own’ The Recession.”

Despite what we’ll hear from our Democratic friends, I suspect the American people will start assigning responsibility for the economy to Obama in early 2010. In order to build support for the economic stimulus package, Obama and Congressional Democrats will have to make the argument that it will have an impact, and that it will have an impact fairly quickly. There’s no urgency to vote for a bill that won’t have an impact until the next term . . .

Which is why the economic forecasts cited by Pethokoukis are supremely ominous for the party in power:

According to the just-released minutes from the Federal Reserve’s December meeting, the central bank now thinks the economy will “decline for 2009 as a whole” and that the jobless rate is “likely to rise significantly into 2010.” And in its new forecast, the Congressional Budget Office said the U.S. economy is now in a recession that “will probably be the longest and the deepest since World War II.” What’s more, the CBO says, the economy will shrink 2.2. percent this year and grow a wimpy 1.5 percent next year as unemployment exceeds 9 percent. Finally, respected Harvard University economist Kenneth Rogoff just released a paper demonstrating that the aftermaths of financial crises are usually marked by “deep and lasting effects on asset prices, output and employment. Unemployment rises and housing price declines extend out for five and six years, respectively.” So the consenus is gloomy.

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