This election in the scrapbook, President Obama now will focus on his legacy, it will be his priority. And he will not be remembered positively on economic issues. The deck is stacked too much against him.
The US Office of Management and Budget is forecasting very modest economic growth for the next several years. It also predicts the deficit will move only slightly in a positive direction during the coming 10 yrs. The evaluation of the Congressional Budget Office is more pessimistic.
The US Federal Reserve forecasts that unemployment will remain at unacceptable levels through Y 2014 and perhaps beyond. That being the case, the central bank is prepared to keep interest rates near Zero for the entire period between now and then.
The fantasy that Congress and the President can even out disagreements before the Fiscal Cliff is reached will last until, at year’s end, there is not agreement.
Whatever mandate a 2nd term may give Obama, the Republicans will ignore it. They believe too strongly in their own philosophy on taxes and spending. There is a forecast a recession early next year in the US without a solution, that will give Obama opportunity to preside over a US economy that will have 2 recessions on his watch.
Beyond the President’s abilities entirely are a resolution of the recession and sovereign paper problems in Europe.
Lots of US companies are reporting that trouble in Europe has dampened their earnings. The blow-back from this is lower capital spending and suspensions of job additions. And employment numbers will likely move further South, if the European trouble continues to grow more.
I read this morning that Obama’s single greatest economic and budget hurdle will be any attempt to alter entitlement programs. Members of Congress, who have to run for re-election in 2 more years, and 33% of the US Senate, which will be up for re-election at the same time, do not want to go to their “baby boomers” who vote in great numbers with a plan to cut the benefits they believe they have earned by decades of work and paying into the system.
An improvement in the US economy, a sharp change in the deficit, a solution to Europe’s problems and an entitlement reduction based solution to the rise in US debt are all well beyond the reach of this President’s solutions.
Therefore, his legacy on the economy is “Set in Stone”, and he has not yet began his 2nd term.
Paul A. Ebeling, Jnr.Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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