06/08/2012 09:00 am ET Updated Aug 08, 2012

A Down Week for the President

There is a timeless ebb and flow about politics -- one week you're up and the next you're down -- and though it is much too early to start picking winners in the November sweepstakes, I don't believe there is any question this has been a tough week for President Obama -- one he would like to forget. There were at least three things that must have set off alarm bells in the West Wing.

First, the economy is headed south. The latest jobs report was disturbing, and suggests the unemployment picture will not be significantly improved by autumn. Historically, high unemployment has spelled bad news for incumbent Presidential candidates. The trend had been moving in the President's favor, but now the economy seems to be running out of gas, at least in terms of job creation. The unemployment rate could trend up in the months ahead.

Even more troubling, our economic situation is part of a generally dismal global economic picture. Everywhere you look -- China, India, Brazil -- we see slowing growth and declining expectations. Europe is going into a recession, and there is serious concern that some EU nations will be forced to abandon the euro. Europe accounts for about one-fourth of world commerce and is a major market for U.S. exports. A weakening European economy will undermine our best efforts to stimulate growth in our own country.

Second, the attempt to recall Wisconsin Governor Scott Walker, in which the Democrats invested tremendous time and resources, was a flop. Walker won decisively. Organized labor is probably the largest and most influential sector in the Democratic alliance, and public sector unions are the most influential sector of organized labor. But labor took a whipping. It is now clear that many voters believe public sector employees are better off than private sector employees and wield too much influence. The vote in Wisconsin suggests most voters are receptive to the Republican message that public sector unions need to be reined in and budget deficits reduced. This will spread to other states like Ohio and Florida.

And third, there is a growing consensus that President Obama will have to trim his sails and cooperate with Congressional Republicans on extending the Bush tax cuts. The President has made taxing the rich a pillar of his campaign rhetoric, but the pressure on him is building. Even former President Bill Clinton has weighed in in favor of renewing the tax cuts. Everyone knows we have to bring the deficit down, but as Great Britain has demonstrated, too much austerity too fast will abort economic growth and leave an even bigger deficit in its wake.

It's a long time until November, but this week will surely cause the White House to reassess its campaign strategy, as it should.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.