The combination of high oil and gasoline prices, rising food costs, higher health insurance premiums and the likelihood of future inflation has jarred consumer confidence, creating a major crisis for the Obama administration.
The collapse has been sudden and dramatic.
In December, the consumer confidence scale in the Rasmussen Poll stood at 81.7 percent. But in January, euphoria set in. President Obama compromised on the George W. Bush tax cuts, the nation seemed to be coming together after the Gabrielle Giffords shooting, and a Republican House sat poised to stop any new spending or social experimentation. On Jan. 11, the Rasmussen confidence index rose to 88.3.
Then reality dawned. Unemployment remained persistently high, economic growth was largely stagnant, and partisan bickering resumed. The confidence level on Feb. 11 dropped to 84.5.
Then, the bottom fell out. The daily Rasmussen polling reflected a drop day after day until, by March 11, the index had fallen to 73.1, its lowest level since it registered a 69 in July of 2009, in the depths of the recession.
The false dawn of January has faded, and the hard, cold reality of a likely second recession is setting in. But this recession is accompanied by the likelihood of inflation, a stagflation syndrome that will probably grip America for years. And which will likely take a manmade recession, on the order of 1979-82, to counter it.
Will Obama get re-elected? No way! In the teeth of the economic catastrophe that is shaping up, his chances are doomed.
The tsunami in Japan, perhaps the greatest tragedy since 9-11, will further impede any prospect for economic growth. There will be a demand for spending to repair the devastation of the quake. But Japan is tied with China as the world's second largest economy, generating12 percent of the global gross domestic product.
With Japan neither producing nor buying for the foreseeable future, the drag on the global economy will be profound.
Worse, the Fed and the administration are out of tools to help. Interest rates are already at zero. Fiscal stimulus — the deficit — already consumes 40 percent of our total government outlays. The Fed is printing money at a ferocious rate under its qualitative easing (QE-2) program. What is left to do?
Only dramatic cuts in the federal deficit, a rollback of regulations that cripple small and community banks, a cancellation of future tax increase plans, a big reduction in federal spending, repeal of Obamacare, freeing manufacturing from the prospect of carbon taxation and unleashing our domestic energy potential can solve our problems. But Obama is not about to undo his legacy of disaster for the American people.
And then there is the longer-term oil and gasoline crisis. Instability in the Middle East is going to mount, not recede. The chances of disruption in Saudi oil supplies and the possibility of an overthrow of the regime (triggered by the best efforts of Iran) will continue to force prices upward. The drag on the economy and the rising consumer discontent in the United States spell further problems for the Obama presidency.
As the Rev. Jeremiah Wright said — outrageously and wrongly — about 9-11, "The chickens are coming home to roost." The policies of this administration — the disastrous overspending, the irresponsible borrowing, the social experimentation — all are magnifying and amplifying the impact of the recession. Relief is not going to come anytime soon.
Instead, the true legacy of the Obama years is likely to be stagflation and an entire decade wiped out by his policies, budget and program. Long after he is gone in 2013, we will still be repairing the damage of his terrible decisions.