More on Obama’s reelection chances
I’m not quite as pessimistic as he is about Obama’s chances, but if unemployment really is at 8.5%, I have to think that he will at the very least face a really tough campaign battle–yea, even if Sarah Palin is his opponent. Unemployment was 7.7% when he took office. I think he’s going to have a hard sell if four years later, it’s almost a full percentage point higher. If we put the car in D, how come it’s not going anywhere, Mr. President?
It will be particularly hard if it’s not changing fast. Unemployment was much higher under Reagan, hitting almost 11% at its 1982 peak. But the rise was short and sharp, the decline equally dramatic; by June 1984, unemployment was back down to 7.2%. We’ve already spent as many months above the 9% unemployment line as Reagan did, and it doesn’t look ready to drop below that level in the next few months. Reagan was dealing with a pure monetary recession: Volcker raised interest rates dramatically in order to get inflation under control, and as soon as he loosened his iron fist, the economy bounced back. This recession is vastly more complicated, with fiscal, regulatory, and other problems that still need to be worked out. I would be very surprised if we saw any sort of dramatic bounce in the next eighteen months–and the next eighteen months is what matters, because most political analysts I’ve talked to think that after about June, an improving economy doesn’t help the incumbent. George H.W. Bush had a fabulous third quarter, economically speaking, and still lost to Clinton.
That doesn’t mean that Obama can’t get re-elected if unemployment is 8.5%. But I don’t think any president since Roosevelt ever has–and if unemployment hadn’t hit nearly 25% under Hoover, I doubt Roosevelt would have won re-election either. If I were the Obama administration, I’d be praying like hell for something in the low sevens.
Megan is absolutely right that recessions after financial crises tend to be nasty beasts. That argues against a 2011-2012 boom like the one Reagan had in 1983-1984 when GDP growth averaged 6 percent and the unemployment dropped by more than three percentage points. There have also been some polls showing Obama trailing possible GOP contenders like Romney and Huckabee. Then again, Intrade still gives Obama a near 60 percent chance of a second term. And I have yet to meet the GOP consultant whose best-case scenario is anything much better than an extremely close contest.