The June employment report suggests that the alleged green shoots are mostly yellow weeds that may eventually turn into brown manure. The employment report shows that conditions in the labor market continue to be extremely weak, with job losses in June of over 460,000. With the current rate of job losses, it is very clear that the unemployment rate could reach 10% by later this summer–around August or September–and will be closer to 10.5%, if not 11%, by year-end. I expect the unemployment rate is going to peak at around 11% at some point in 2010, well above historical standards for even severe recessions.
If that happens it’ll pretty much seal the argument that the so-called stimulus was an epic failure at the task for which we were told it must be rushed into law with insufficient debate allowed. It’ll do more than that, of course, and I mean besides putting even more Americans in dire straights financially. Ed Morrissey over at Hot Air points out the latest Rasmussen tracking poll showing that Obama’s approval ratio is dropping fast. The “passion index”, as it’s called, is the difference between those who strongly approve versus those who strongly disapprove. As of the Thursday report, that ratio is at -8, meaning there’s 8 more percentage points’ worth of respondents who strongly disapprove of Obama’s handling of the economic situation than those who strongly approve. Morrissey quotes Scott Rasmussen from his write up on the poll:
However, the real message in these numbers has less to do with politics and more to do with the fact that this President’s fate will be determined by the economy. … So, when you’re thinking about the potential impact on the 2010 elections, the key question is what will the economy be like next year at this time. If the economy recovers, jobs are being created, and GM is doing well, the President’s numbers will be up. If the economy is still struggling, unemployment is high, and GM is seeking more bailout money, then the President and his party will have a difficult fall.
If the track follows what Roubini is projecting then it’s going be more than just “difficult” for the Dems in 2010. They can still pull out of this a bit if they show they’re interested in keeping our debts down and in not vilifying the business community. Firms aren’t hiring now because they’re convinced they’re going to get hit with even higher taxes and more onerous regulatory programs should Obama and the Democrats do what they’re saying they will. They need to be shown that’s not going to happen before they start sinking investment dollars into things that are only going to get turned against them.