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Obama optimism low as US economy struggles -

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KERRY O'BRIEN, PRESENTER: Two years on from the Lehman Brothers collapse and the financial crisis
and severe recession that followed, the United States is still mired in economic malaise.

Unemployment is sitting around 10 per cent, foreclosures remain at record levels in many parts of
the country and businesses are still struggling.

President Obama says he's confident that things are starting to pick up.

Polling suggests the voting public thinks otherwise. Democrats are bracing themselves for a voter
backlash at next month's mid term congressional elections. No amount of soaring presidential
rhetoric is likely to change the outcome.

North America correspondent Michael Brissenden reports.

(Upbeat music plays, crowd cheers)

MICHAEL BRISSENDEN, REPORTER: Just weeks to go until the mid term congressional election and Barack
Obama is back out fighting.


MICHAEL BRISSENDEN: From university rallies, to lounge rooms and backyard chats, the President is
now doing what many in his own party have been looking for for months.

BARACK OBAMA: If you're willing to step up to the plate and realise that change is not a spectator
sport, we will not just win this election, we are going to restore our economy. We are going to
rebuild the middle class.

JEREMY MAYER, PUBLIC POLICY, GEORGE MASON UNIVERSITY: It's interesting. The talk in Washington for
the last year and a half has been "Where is that great communicator?"

With increasing frequency you hear people say "He's not getting his message across".

BARACK OBAMA: The power to shape our future lies in our hands but only if we're willing to keep
working for it.

JEREMY MAYER: We are beginning to see in the last two weeks that old Barack Obama from the
presidential campaign that people remember from 2007 and 2008.

(Laughter as Barack Obama hugs very old lady)

MICHAEL BRISSENDEN: But even the most optimistic concede that campaign showmanship alone won't stop
the backlash.

BARACK OBAMA: How about a picture, somebody?

JEREMY MAYER: When you have an America which got used to unemployment at 5 per cent, 4 per cent for
so long and now unemployment is over 9.5 per cent, there's nothing else that people are talking
about in this election that comes close to the economy. And for better or worse, blame goes to the
President and his party.

The American public is less convinced now that you can blame George Bush for this.

BARACK OBAMA: I know times are tough right now. I know times are tough.

I know a lot of folks are anxious about the future and I know sometimes it feels a long way from
the hope and excitement that we felt on election day or the day of the inauguration. But I've got
to say, we always knew this was going to take time. We always knew this was going to be hard.

(Siren wails)

MICHAEL BRISSENDEN: But the fact is, for many of the victims of this downturn, it's simply taking
too long.

DEBORAH HARRIS: I'm waiting for our new president to give us some insight on what he's doing. I
have my pen ready for the next election.

LEONARD GREY: We still don't really have a good explanation why they closed down.

MICHAEL BRISSENDEN: Deborah Harris and Leonard Grey are just two of the 160 people who lost their
jobs when this restaurant on the Baltimore restaurant closed its doors back in June.

Both are still looking for work and the political consequences of that are clear.

DEBORAH HARRIS: Because I'm one of the Independents, so I can go either way, okay? And right now
the Democrats are not looking good for me. That's just my opinion.

WIN THIN, ECONOMIST, BROWN BROTHERS HARRIMAN: If anything, the voters here got a little perhaps too
optimistic we could turn this thing around. And the US economy had a good run, but we had serious
financial problems that built up over several years. So it's not something that's going to be
resolved overnight.

MICHAEL BRISSENDEN: Despite the billions spent bailing out the car industry and the banks and the
nearly $800 billion stimulus package, the US economy is still struggling to bounce off the bottom.

The national unemployment rate has remained stubbornly unresponsive at around 10 per cent, but in
some of the more depressed areas of America's big cities the jobless figure is more like 30 per

And up the pointy end of town, Wall Street isn't providing much hope at the moment either.

WIN THIN: As you know, the sentiment has been swinging wildly. It's not just month to month, but
I'd say day to day.

(Wall Street bell rings)

MICHAEL BRISSENDEN: For the investors, traders and speculators who play the market, it's proving to
be remarkably hard to shake off the crash of 2008.

The President has been talking up what he says is a strengthening economy but all the talk here at
the moment is of a double dip recession. No one knows for sure of course and as the old saying
goes, if you get two economists and put them in the same room, you'll get two different opinions.

But one thing is clear - the markets are still incredibly nervous.

This recession has proved to be deeper, wider and tougher than any downturn since the Great
Depression and the impact is still being felt at every level.

ROBERT KNAKEL, REAL ESTATE AGENT: At the height of the market in 2007, there were $63 billion in
invest sale transactions in New York City. Last year that figure fell to $6.2 billion, so there was
a 90 per cent reduction in the volume of sales transactions.

MICHAEL BRISSENDEN: Robert Knakel sells real estate in the cut throat high end market of New York
City. But high end or low end, the economic fundamentals remain the same. And even here he says
things won't really improve until more jobs are found across the board.

ROBERT KNAKEL: Well, clearly people who have lost a job or fear they may lose a job don't move out
of mom and dad's house into a new apartment. They don't move from a 1 bedroom unit to a 2 bedroom
unit. They don't move from a rental apartment to buy a property or a single family home.

And companies that are reducing their payroll are looking for less office space, not more.

MICHAEL BRISSENDEN: And it's pretty clear that some of those who spend their lives watching and
interpreting the numbers fear there could still be a lot more pain to come.

WIN THIN: It's really tough. I mean really, the US policymakers and I'd say policymakers around the
world have really sort of, you know, put all their eggs in one basket.

We had a massive round of stimulus, fiscal, last year. We had zero interest rates. So you know,
you're hearing more and more talk about a Japan style outcome and I think that's something... I
don't think we're as bad off as Japan is. They've had 20 years of stagnation, but certainly the
parallels are there in terms of policy levers have been used up.

MICHAEL BRISSENDEN: Barack Obama may not be looking that far ahead but he is certainly looking
beyond next month's Congressional vote to the presidential poll in 2012. And once again, history
suggests whatever happens between now and then, nothing will secure his own job more than finding
jobs for others.

JEREMY MAYER: Ronald Reagan in 1982 got shellacked in the mid terms. He was unpopular - more
unpopular then than Barack Obama is today - because unemployment was very high and the economy was
doing very poorly.

And then just two years later with the economy roaring back Ronald Reagan won the greatest
electoral victory in the history of the Republic. So American politics can change quickly following
the economy up and down.

KERRY O'BRIEN: Michael Brissenden testing the pulse in America.