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09 Mar 2008 07:16
The prospect of recession is looming over the American presidential election campaign, amid a wave of job losses and collapsing home prices that could see the political battle being fought in the middle of an economy in crisis.
Last week was marked by rising oil prices, tens of thousands of lost jobs and plummeting share prices that will have a profound impact on the candidates vying to succeed President George Bush.
Some experts believe the bad news could boost the chances of Hillary Clinton. She has scored wins against rival Barack Obama in states such as Ohio, where the economy is a dominating local issue.
But the Obama campaign had a much-needed boost on Saturday as he won the Wyoming caucuses.
Though Wyoming’s caucuses are worth just 12 of the vital convention delegates needed to clinch the Democratic nomination, the win is nevertheless a boost to the Obama campaign.
Clinton’s victories last week have allowed her to paint herself as a comeback candidate. As the economy falters yet further, it could provide Clinton’s revitalised campaign with more momentum, especially since the next key electoral battleground is Pennsylvania, which has a similar social make-up to Ohio. However, Obama has also struck a more populist economic tone in recent weeks, seeking to capitalise on middle-class fears over vulnerable jobs and losing their homes.
Many economists and commentators now believe that a recession is almost a certainty. Recent headlines have made deeply pessimistic reading. “End to the good times,” the New York Times said on Saturday in a story warning that the downturn was already here.
Elsewhere, stories of factory closures and hundreds of thousands of mortgage foreclosures are dominating newspapers and the cable news channels. Some TV shows are running special segments advising people on how to cope with being laid off.
It is simple facts and figures that have prompted the latest round of hand-wringing about America’s economic prospects. Late last week, the most recent employment figures showed that the US had lost 63 000 jobs in February, a considerably higher number than most experts had predicted. It prompted a continuation of a sell-off on Wall Street. The Dow lost more than 370 points throughout last week. Another measurement of the stock market—Standard & Poor’s 500 stock index—has now got off to its worse start to a year since 1933.
Oil prices are now at a record high, topping more than $100 a barrel. That has raised prices at the pumps for American drivers and floated the prospect of motorists paying $4 a gallon for petrol, which, though low by many European standards, is a frightening prospect for car-reliant American commuters.
Underlying the whole slowdown is a credit crunch prompted by the disaster in the housing industry in the wake of the subprime mortgage crisis. As millions of homeowners have defaulted on their risky loans, the boom in house construction has come to a grinding halt. Many Americans have lost their homes and millions of houses across the country are empty after being repossessed by the banks.
In an effort to boost the economy, the federal government has come up with several schemes to raise personal and corporate spending and thus spark an economic revival. Bush recently announced a stimulus package to give tax rebates to millions of consumers, and those cheques—up to $1 200 for a couple—will be sent out in May. The Federal Reserve has also cut interest rates five times since September, then late last week announced it would pump $200-billion dollars into the country’s banking system in the form of cheap loans.
The overall political impact of any recession on the race for the White House between Democrats and Republicans is uncertain. Some think that tough economic times are likely to hit the Republicans hard as they take the blame for Bush’s economic mismanagement and the billions of dollars spent in Iraq. That could benefit greatly whoever emerges from the titanic clash between Clinton and Obama.
However, John McCain, the Republican nominee, has a reputation for fiscal conservatism that has survived the high government spending of the Bush years. He has made that a key part of his appeal and has frequently campaigned against government financial abuse. In times of crisis, his age and experience might prove appealing to economically distressed voters.—Guardian Newspapers Limited 2008
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