Financial markets have tumbled after today's slew of bad economic data, including weak PMI from China and Europe, and pretty horrible employment data both in Europe and here at home. (See: May's Jobs Report Disappoints Across the Board) In current trading, the Dow is down 1.7% to 12,188 and the S&P has fallen 1.8% to 1286 as fear of recession grips investors.
In an election year, the state of the markets and the economy is closely tied to who takes the White House. It's no secret that voters vote with their wallets--as Bill Clinton famously said, "It's the economy, stupid."
So it's no surprise that, behind closed doors, Republicans are high-fiving about today's lousy jobs numbers which were the worst in a year. Only 69,000 jobs were created in May and the unemployment rate ticked up to 8.2%.
Ben White, the Wall Street editor for Politico, says that Republicans are quietly jubilant about the jobs miss, which will give Mitt Romney a helping hand in the upcoming election.
The jobs report wasn't a complete disaster, White says--the country still created some jobs in May--but if the monthly jobs numbers fall even further, Romney's campaign will get a major shot in the arm.
Meanwhile, there's not much more that the Fed can do, because interest rates are already at or near record lows. (See: Record Low Interest Rates Stiff Savers and the Economy)
And what about the "fiscal cliff" and "Taxmaggedon" that await the country early next year--in which automatic spending cuts will kick in and taxes will jump? Will Congress do anything about either of those issues?
No, says White. Congress won't dare do anything before the election.
So, put it all together, and it's unlikely that the government can or will ride to the economy's rescue, at least until votes are cast in the fall.
After that, presumably, it will be a whole new ballgame.