newsprintLast week Democrats tried to brush aside disastrous economic news about the economy.  Specifically, the Commerce Department reported they expected 1st quarter GDP to be revised downward, a lot, to the tune of a 2.9% contraction.  For Democrats who came to power in 2009 blaming the other guy for driving the economy in the ditch and then getting the country out of the ditch this is disastrous news.

The economic contraction was broadly based.  The contraction primarily reflected negative contributions from private inventory investment, exports, state and local government spending, nonresidential and residential fixed investment.  Healthcare spending also dropped significantly.  The Bureau of Economic Analysis is unsure why healthcare spending has dropped significantly.  One school of thought argues that it is a transitional phenomena-people waited until the last minute to pay bills and sign up for healthcare insurance.  A less likely theory is the bad weather in the 1st quarter kept people from shopping.  However, bad weather does not make people stop spending altogether.

It is little surprise that Democrats face a tough election cycle.  The President is unpopular, likely a drag on many incumbents, and the party is defending a number of vulnerable House and Senate seats.  Obama is a particular drag to candidates in Senate races in AR, LA, WV, AK, NC, SD, IA and CO.  Obama won only two of the eight states (IA and CO) in 2012.  Further, voters worried about the economy, continuous administration scandals and Obamacare are not big on Democrats.  A weak economy is likely to make the party’s predicament worse.

Democrats have attempted to fortify their position by localizing their races.  However, this is hard to do in the era of digital technology bringing instant news to virtually every American and SuperPACs and 3rd party groups spending heavily to tie incumbents to the President.  Republicans have already enjoyed success with such a narrative, most recently in the FL-13 special election to replace former Congressman Bill Young.  A weak Republican candidate overcame a strong Democratic challenger in a purple district Democrats were heavily gunning for.

In economic lexicon it takes only two quarters to put the economy in a recession and we are already halfway there.  It might not be overly forward to argue if the economy does go into recession the Democrats can kiss their long shot hopes of taking the House and holding the Senate goodbye.

 

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