In the movie, Rocky II, the character Apollo Creed got a rematch with the character Rocky Balboa for the heavyweight championship of the world. Balboa was able to pull out a win with the tenacity and heart that endeared him to the city of Philadelphia. Creed, as he was in the first match, was favored, but the intangibles betrayed him and he lost. In the case of Barack Obama, what could cost him his lead are more tangible that not.
The biggest tangible is the economy. Overall, the numbers are not in his favor. The U.S. Department of Labor reports that the overall unemployment rate is 8.1%. Black American unemployment is 14.1% while Latin Americans face an unemployment rate of 10.2%. The consensus view of full employment is where the unemployment rate falls within a range of four to six percent. Near and immediate term forecasts don’t see the economy falling to the point anytime soon.
America’s productive capacity has been experiencing a roller coaster ride of its own. The Board of Governors of the Federal Reserve reports that in August 2012 the industrial production index was 96.8. This means that America’s manufacturing, mining, electrical, and gas utility output in August was equal to 96.8% of industrial production in August 2007. The Federal Reserve reports that the index for July 2012 was 98.
America also has too much slack in its capacity. The Federal Reserve reports that in August 2012, the nation was using 78.2% of the capacity needed for production in mining, manufacturing, electricity, and gas utilities. In July this number was 79.2%.
For businesses to hire there must be an increase in consumer demand for their goods and services. Historically, consumer demand has made up approximately 70% of our output so consumer spending plays an important role in growing the economy and creating jobs.
Unfortunately for Mr. Romney, he has not been spending the necessary time driving home these points. Fellow Republicans have been criticizing Mr. Romney for not spending more time on the ground in certain swing states. Recent gaffes by Mr. Romney have not made things easier.
According to a report in The New York Times, Mr. Romney is failing to make inroads in states that should provide fertile ground for his “expert of the economy” arguments. North and South Carolina are tied for state with the fifth worst unemployment rate while Nevada holds the top spot at 12%, yet, according to the Times, Mr. Romney is behind in these states.
In Ohio, Mr. Romney allegedly spends no time in rural counties, according to The New York Times. Part of the reason may be due to cash shortages the campaign experienced last month. Half the cash raised in August by Team Romney could not be used until after the convention. This requirement put the campaign in the position of having to borrow money to fund the campaign in the meantime.
Team Obama does not have the luxury of gloating. Mr. Romney can still make strong arguments based on the economy that Mr. Obama should not continue as chief steward of the American economy. He can argue that Mr. Obama has not managed to grow the economy such that more people are going to work. No president has survived a run for the presidency with an unemployment rate above 8%.
With the economy still the number one issue, Mr. Obama will have to defend why he and a Democratic Congress in 2009 and 2010 decided to promote, draft, and implement the American Recovery and Reinvestment Act, the Dodd-Frank Act, and the Affordable Care Act while the economy continued to flounder in malaise. More than likely Mr. Romney during the debates will challenge Mr. Obama to show how these pieces of legislation have led to significant job growth and if re-elected, how would continuation on the same glide path lead to reductions in unemployment.
The race isn’t over yet. Whoever comes out humming the theme from Rocky the loudest and most passionately may have the inside track to the White House in November.