EconomicCrisis.US

Political observers of every stripe agree it will be the deciding factor in November’s midterm elections. And between now and Election Day, there will be key milestones to measure just where the economy is heading — and perhaps more importantly, where voters think it is heading.

Here are five indicators that campaign strategists will be watching for:

1. August jobs report

The government’s monthly jobs reports have become the single most important proxy to measure the economic health of the nation and the political health of the Obama administration, with a significant portion of political Washington glued to computer screens at 8:30 a.m. on the first Friday of each month, waiting for the results.
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The U.S. economy should expand at a solid pace this year and next as consumers increase spending, confident the recession is behind them, a panel of economists said in a survey released Monday.

The 46 economists surveyed in the National Association for Business Economics report between April 27 and May 7 predicted U.S. gross domestic product would expand by 3.2% in 2010 and 2011.

That is a touch higher than the 3.1% growth predicted for both years in the last survey, released Feb. 10.
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How quickly we forget.

Less than two years ago the all but unthinkable happened when venerable investment bank Lehman Brothers collapsed into bankruptcy.

Only a massive taxpayer-funded government intervention prevented the likes of American International Group (AIG: 37.436, -0.334, -0.88%), Bank of America (BAC: 16.729, -0.801, -4.57%), and Citigroup (C: 4.1, -0.0875, -2.09%), among other large and influential financial services firms, from following suit like so many dominoes.

Lehman’s implosion was perhaps the most high-profile event stemming from the bursting of the U.S. housing bubble, but the street-level collateral damage has been just as devastating: 8.5 million jobs lost, an unemployment rate still hovering near 10%, and many millions of homes in foreclosure.
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Weighing his words, Federal Reserve Chairman Ben Bernanke declared Wednesday that the crisis that had the nation’s financial system teetering on the brink of collapse is “largely behind us.”

“But we are far from being out of the woods,” the central banker cautioned 1,448 business people at a Dallas Regional Chamber luncheon while 10 demonstrators ideologically opposed to the Federal Reserve protested peacefully across the street. Bernanke said that there is still no evidence of a sustained recovery in the housing market, that delinquencies of both subprime and prime mortgages are rising, and that the commercial real estate sector remains troubled — a concern for local communities and for the banks holding the notes.
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