Economic trend lines, for now, favoring Obama
WASHINGTON — For the past year, as the presidential election unfolded, President Barack Obama confronted a dizzying swell of economic news — hiring up, hiring down, a euro crisis abroad, seesawing gasoline prices at the pump, foreclosures dragging down home values.
Six weeks before the election, those highs and lows are merging into a straighter line which, while below optimum performance, is moving in a positive direction for the country and for the president in his contest with Republican rival Mitt Romney.
Consumer confidence is at its highest level since February. Home values are up and, more important in the election season, housing prices in 20 major cities, many of them in battleground states, rose in July. Despite recent declines, the stock market has been on an upswing, adding value to Americans' retirement plans.
Improving consumer confidence is certainly a positive sign for Obama, who has faced a slow economic recovery and a stubbornly high unemployment rate that has remained above 8 percent since virtually the start of his presidency. The consumer confidence index, as measured by The Conference Board, jumped from 61.3 for August to 70.3 for September, though it remains well below 90, the level that is thought to signify a healthy economy.
The numbers track with recent public opinion polls showing that while a majority of Americans say the country is heading in the wrong direction, an increasing number say the country is on the right path. The rising optimism also coincides with polls showing Obama opening leads in some crucial swing states, including all-important Ohio.
If Obama's advantage holds through Election Day, September may be remembered as a pivotal month when political and economic attitudes began to gel.
A weak recovery still makes the economy vulnerable, and public opinion can still change during the critical month of October. Three debates next month between Obama and Romney have the potential of shaking up the race. And the stock market showed its fickleness Tuesday with its worst sell-off since June after a Federal Reserve official cast doubt on the effectiveness of the central bank's recent economy-boosting measures.
But with early voting already under way in some states and with a shrinking number of persuadable voters, Obama aides see a favorable political landscape despite Romney's focus on sluggish growth.
Obama advisers have long argued that despite the economy's weak performance, Obama's re-election hopes rested on a positive trend line. Indeed, Obama has been running an ad since the Democratic convention earlier this month that points to private sector job growth even as it acknowledges "we're not there yet."
"The economy is perceived in relative rather than absolute terms," said St. Louis University political scientist and pollster Ken Warren.
Romney aides argue that their bottom-line argument — that the country cannot afford another four years of Obama — remains a winning message that can still resonate with undecided voters.
While the confidence accrues to the president's benefit, consumer attitudes are more a reflection of their economic perceptions than they are of presidential approval. What's more, studies of the relationship between politics and consumer confidence show that falling confidence hurts a president's approval rating more than rising confidence helps.
If the president can benefit, pollsters say Democrats and Republicans seeking re-election in tough contests might also profit from improving economic indicators.
"It would help all incumbents because people are less angry," Warren said.
The rise in confidence comes as the Standard & Poor's/Case-Shiller index showed that national home prices rose 1.2 percent in July compared with a year ago, increasing home equity and, by extension, the perception of personal wealth.
"People pick up on that very quickly," said Rob Shapiro, an economist and former adviser to President Bill Clinton. "They're no longer getting poor every month. So people think, 'OK, we are on a better path, even if we're proceeding on it a lot more slowly than I expected or hoped.'"
Significantly, prices are rising in many large cities in swing states such as Florida, Colorado, Michigan and North Carolina. Prices have risen 3.6 percent in Tampa, Florida, in the past year, for example. And they're up 5.4 percent in Denver, 6.2 percent in Detroit and 2.2 percent in Charlotte, North Carolina.
Still, Obama is bucking trends. Unemployment stands at 8.1 percent, and no president has been re-elected with unemployment above 8 percent since the Great Depression. Despite improving public attitudes, an Associated Press-GfK poll this month found 52 percent of likely voters said the country was moving in the wrong direction.
"Going from absolutely horrible to really, really bad is not exactly an endorsement of an incumbent president's record," Republican pollster Whit Ayres said. "We're a long way from measures that show the American people have confidence in the direction of the economy."
Shapiro concedes that the politics are confounding. A Washington Post poll out Tuesday showed Obama leading Romney among likely voters in Ohio, 52 to 44 percent. The president also had a slight edge in Florida, 51 to 47 percent among those most likely to vote.
"We have a president who is leading in a very convincing way despite economic numbers that suggest that he should either be losing or just hanging on, and he's not just hanging on," Shapiro said.
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