The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
WASHINGTON — The Federal Reserve economic forecast is bleak. It predicts high unemployment will plague the rest of President Barack Obama’s four-year term. The assessment provides the strongest reason yet for any Republican who ever dreamed of occupying the Oval Office to launch a campaign in 2011 to be the party’s candidate to challenge Obama in November the following year. And many will. But the president remains a formidable opponent.
The midpoint of the November 2010 economic outlook from Fed policymakers has unemployment ending 2012 at around 8 percent. Even if Obama’s trillion-dollar stimulus spared millions of jobs, Republican candidates will surely remind voters that the president’s economic advisers promised to keep unemployment from ever hitting that lofty level.
Obama’s team likes to compare its political plight to that of President Ronald Reagan. Unemployment was 8 percent or higher for half of the Republican’s first term, the last time the country experienced a recession anywhere near as bad as this latest one. And Reagan still won by a landslide. But the economy was racing and the jobless rate tumbling when he faced voters in 1984. Another White House incumbent who looked a guaranteed loser was Harry Truman in 1948. But blistering 7 percent GDP in the first half of that year helped Truman pull off the biggest upset in U.S. presidential election history.
Obama probably won’t have such wind at his back. An overhang of debt and housing problems should keep GDP growth moderate. Some at the Fed also reckon that even if growth picks up sharply, workers still won’t have appropriate abilities for available positions.
Perhaps with that in mind, a herd of Republicans are sure they have just the right skills for Obama’s job. The frontrunner, whether measured by polling, financial or betting market performance, is Mitt Romney, the former Massachusetts governor and head of private equity firm Bain Capital. But he will need to contend with a group of rivals that may include Sarah Palin, Minnesota Governor Tim Pawlenty and Senator John Thune of South Dakota. By late spring, the crowded field will be set.
GOP contenders shouldn’t get cocky, however. By 2012, Obama could have unexpected economic improvements to boast about. And the president’s own finances should be sound even if America’s aren’t. He could raise $2 billion for a second run — and sitting U.S. presidents rarely lose. What’s more, midterm election beatings seem to have little bearing on re-election odds. For now, those too are working in Obama’s favor, suggesting a better than even chance at four more years.