The Obama Administration was hoping that reassuring signs from the 4th quarter of 2010 would spur growth and job creation through out this year, propelling them to re-election.
After an especially weak report on February’s trade deficit,economists from Macroeconomic Advisers, a forecasting company, lowered their first quarter G.D.P. estimate to a pathetic rate 1.5%annualized. This was followed by forecasters at Morgan Stanley and RBS Securities also lowering their G.D.P. estimates for the first quarter.
This could simply be a small variation and pull back of the recovery…that is common in slow, grinding economic revivals. But this is certainly bad news for the economy. Optimists, led by the economic team in the White House, were hoping for a growth rate of 3.5-4%. That rate of growth would be necessary for significant job growth over the next year and a half, leading into the 2012 election. A growth rate of less than 2% may mean more stagnation on the jobs front.