Consumer spending slowed under the weight of growing pessimism about the effectiveness of U.S. President Barack Obama's economic program and a growing sense that former Massachusetts Gov. Mitt Romney won't unseat him. The president leads in polls in most swing states and the president has made clear his intention to double down on interventionist economic policies.
The trade deficit worsened, increasing its drag on domestic demand and gross domestic product. Administration curbs on domestic oil production and his failure to address Chinese currency manipulation -- the two principal causes of the gapping $600 billion trade deficit and hole in domestic demand -- slow growth more and more each quarter. In the second quarter, the increase in the trade deficit subtracted 7-10ths of a percentage point from growth, or more than $100 billion and 1 million jobs.
The president argues he inherited a big economic mess but so too did Ronald Reagan. During Reagan's first term, unemployment peaked at 10.4 percent in contrast to 10 percent during Obama's tenure.
Reagan cut taxes, followed through on deregulation initiated by President Jimmy Carter and put his bets on the private sector -- when he faced the voters the economy was growing at better than 6 percent.
Obama has shut down much offshore and Alaskan oil production, invested in failing alternative energy projects, and emphasized heavy regulation and state direction of the economy -- is growth rate during the current recovery is 2.2 percent.
During Reagan's first term, optimism caused more Americans to seek jobs. The percentage of adults participating in the labor force rose and unemployment fell to 7.2 percent by Election Day.
Since Obama took office, record numbers of Americans have become discouraged and quit looking for work, and the unemployment rate has not fallen nearly as much as it did for Reagan. It hangs at more than 8 percent and few economists expect it to fall much further.
The difference is plain: Reagan acted to unleash the creative energies of the private sector while Obama has moved in the opposite direction.
America is all about private enterprise, and without leadership that believes in the primacy of the private sector, it can't succeed.
(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist.)
(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)
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