2012 Election To Revolve Around Economy

31 January 2012 - Which Way to Pay

2012 Election To Revolve Around Economy

The economy is set to the main focus for election candidates. Obama’s re-election campaign may be difficult considering unemployment is above 8% and GDP is growing below historical trend. The government is spending less on schools, roads, bridges and social services as government spending at all levels dropped an annual rate of 4.6 % in the last quarter of 2011. James Pethokoukis, of the American Enterprise Institute, has been comparing the Obama recovery to the Reagan recovery, suggests the latter was much more robust. However, comparing the two recoveries is rather unfair considering Obama has had to deal with the housing bust unlike Reagan.  The President currently presides over an economy than eluded the double dip recession threat in mid-2011 and is now strengthening, with the Commerce Department saying last week that the U.S. economy grew 2.8 % at the end of 2011 which was the fastest pace in 18 months.

Treasury Secretary Tim Geithner, at the World Economic Forum in Davos said that the “critical risks” facing the American economy were the European debt crisis coupled with increasing tensions with Iran that could see global oil prices rise.  Larger companies across the country have been reporting strong profits recently. Even though America now produces more than it did when the recession began, it does so with over 6 million less workers. Yesterday, the personal income rose 0.5 % in December, but consumer spending remained the same while savings increased to 4 % of total disposable income. The U.S. economy is still struggling with the aftermath of a global credit crunch caused by a drop in the housing market. It seems the pace of recovery is not as good as it could be but signs of strength are starting to translate into greater public optimism. It will definitely help Obama if the economy is moving forward and a feeling of progression is felt across the country.