Just wonderful

From James Pethokoukis writing at Reuters:

Panic at the White House? Gloomy Goldman Sachs sees high unemployment, possible recession
Last night in a new report, Democrat-friendly Goldman Sachs dropped an economic bomb on President Obama�s chances for reelection (bold is mine):

Following another week of weak economic data, we have cut our estimates for real GDP growth in the second and third quarter of 2011 to 1.5% and 2.5%, respectively, from 2% and 3.25%. Our forecasts for Q4 and 2012 are under review, but even excluding any further changes we now expect the unemployment rate to come down only modestly to 8�% at the end of 2012.

The main reason for the downgrade is that the high-frequency information on overall economic activity has continued to fall substantially short of our expectations. � Some of this weakness is undoubtedly related to the disruptions to the supply chain�specifically in the auto sector�following the East Japan earthquake. By our estimates, this disruption has subtracted around � percentage point from second-quarter GDP growth. We expect this hit to reverse fully in the next couple of months, and this could add � point to third-quarter GDP growth. Moreover, some of the hit from higher energy costs is probably also temporary, as crude prices are down on net over the past three months. But the slowdown of recent months goes well beyond what can be explained with these temporary effects. � final demand growth has slowed to a pace that is typically only seen in recessions. .. Moreover, if the economy returns to recession�not our forecast, but clearly a possibility given the recent numbers �

Alarms bells must be ringing all over Obamaland today. Unemployment on Election Day about where it is right now? Sputtering � if not stalling � economic growth? To many Americans that would sound like the car is back in the ditch � if it was ever out. Maybe Goldman is wrong, but economists across Wall Street have been growing more bearish.

And recall that back in August of 2009, the White House � after having a half year to view the economy and its $800 billion stimulus response � made an astoundingly optimistic forecast. Starting in 2011, with Obamanomics fully in gear and the recession over, growth would take off. GDP would rise 4.3 percent in 2011, followed by � 4.3 percent growth in 2012 and 2013, too! And 2014? Another year of 4.0 percent growth. Off to the races, America.

The reason why Goldman Sachs is so big and so powerful is that they are very very good at what they do -- economic modeling and forecasting. If they say things don't look to good, I would start hording canned food and digging a bomb shelter. James also mentions something that bears repeating:

Unemployment is at 9.2 percent (11.4 percent if the official labor force hadn�t collapsed since 2008 and 16.2 percent if you include discouraged and underemployed workers.)

The unemployment rate is now being quoted as being 9.2%. Since Obama took office, the US has lost a large number of jobs due to businesses closing. If you took the number of people that were employed in 2008 and look at the number of people who are not working now, that unemployment number would be 11.4%. At the height of the Great Depression in 1933, unemployment was around 22%. A little bit too close for comfort...