While Democrats continue to fumble the “better off” question,  new economic indicators provided even more of a challenge to Barack Obama and his surrogates as the Democratic National Convention opens today.  Manufacturing dropped in August more sharply than any time in the last three years of recovery, and construction contracted at the fastest rate in a year.  Reuters manages to avoid the “U” word, although CNBC had it on the front page:

U.S. manufacturing shrank at its sharpest clip in more than three years in August while U.S. construction spending in July fell by the most in a year, new reports showed on Tuesday.

The Institute for Supply Management said its index of national factory activity fell to 49.6 in August from 49.8 in July.

The reading fell shy of the 50.0 median estimate in a Reuters poll of economists. A reading below 50 indicates contraction in the sector.

On Friday, just hours after Obama’s acceptance speech, the Bureau of Labor Statistics will release the jobs report for August.  The ISM index portends a bleak report:

The index’s employment component fell to 51.6, the lowest since November 2009, from 52.0 in July.

New orders, a forward-looking sub-index, fell to 47.1 in August, the worst showing since April of 2009. It stood at 48 in July.

Construction looks just as bad:

U.S. construction spending fell in July from June by the largest amount in a year, weighed down by a big drop in spending on home improvement projects.

The Commerce Department says construction spending declined 0.9 percent in July. It followed three months of gains driven by increases in home and apartment construction. New home construction rose again in July, but spending on home renovation projects fell by 5.5 percent.

Can’t blame me for the dropoff in home renovation projects — I’ve spent thousands of dollars in redoing the house, after 14 years of the status quo.  Obviously, I’m more the exception than the rule.  Renovation takes either a willingness to spend savings or take loans, both of which require a certain level of optimism about one’s personal economic situation as well as the overall economy.  Clearly, that optimism has dropped.  We’re now going back to the first months of the recovery, or even the recession itself when it comes to new manufacturing orders.

Democrats had better have an answer for these indicators and the overall economy during the next three days.  If they wait until the jobs report to start talking about the economy and a second-term Obama agenda in any serious way, they’ll likely have to play even more defense over the next two months.  The juxtaposition of Obama’s acceptance speech and the August jobs report make this the most critical in the cycle for Obama.

Update: Don’t expect much about second-term agendas, Major Garrett reports for National Journal.  The very mention flummoxes Democrats in Charlotte:

The easiest way to trip up a Democrat in Charlotte for the national convention is to ask him to answer this question: What is Obama’s vision for a second term?

The placeholder answer, of course, is “creating an economy built to last.” But this talking point has, even to Democrats, begun to wear thin. It’s often repeated, but lacks definition.

“Nobody really knows what that means,” said Joe Trippi, a Democratic strategist who handled Jerry Brown’s gubernatorial campaign in 2010. So even though Obama’s reelection slogan is “Forward,” there’s not much talk—at least not yet—of what the country would move forward toward, or of the specific policies that Obama would enact to propel the nation up and out of the current low-wattage economic recovery.

That’s because it’s become increasingly clear that Obama himself doesn’t know how to do that.  His Obama recovery barely materialized, and now it looks as though it’s fading even faster than Hope and Change.