Incomes, not jobs, could sink Obama re-election

April 3, 2011

The Obama 2012 presidential campaign, which has now officially sprung to life, confronts a vexing political puzzle. The unemployment rate is plummeting. After the March jobs report release, White House economic adviser Austan Goolsbee pointedly noted that the full percentage-point decline over the past four months is the largest such drop since 1984.

That statistical coincidence dovetails neatly with this David Axelrod-endorsed narrative: Just as Ronald Reagan bounced back from a nasty first-term recession to win re-election in 1984, a jobs rebound will mean four more years for Barack Obama. Got that, MSM? Obama 2012 = Reagan 1984. Now shut your laptops and run along.

But as the Obama political shop has surely noticed, the unemployment rate isn’t the only politically important number on the decline. Simultaneously, their boss’s approval rating has fallen from 51.0 percent on Jan. 24 to 47.4 percent today, according to the RealClearPolitics poll average. A large-sample Quinnipiac survey out last week had Obama at 42 percent. And a recent Reuters-Ipsos poll found that Americans’ confidence in the way the country is going has slumped to its lowest point of Obama’s presidency with 64 percent believing the nation is on the wrong track. Even as more jobs are being created, so are doubts about Obama.

Keep in mind that forecasting models suggest a president with a 50 percent approval rating on Election Day has an 80 percent chance at re-election vs. just a one-in-three chance for an incumbent with a 45 percent rating. And polling analyst Nate Silver notes that every incumbent with an approval rating of 49 percent or higher since World War Two won re-election, while every candidate with a rating of 48 percent or lower lost.

Morning in America 2.0, Mr. Axelrod? More like Threat Level: Midnight. And here’s why: While jobs are growing, incomes are not. And income growth — or the lack of it — political scientists agree, is the economic variable with the most impact on national elections. Strong growth in real disposable personal income led to huge victories for Reagan in 1984, Richard Nixon in 1972 and Lyndon Johnson in 1964. Weak or negative growth doomed Jimmy Carter in 1980, George Bush in 1992 and John McCain in 2008.

Real disposable personal income fell 0.1 percent in February. Average hourly wages were flat in March, and have grown at a 1.8 percent annualized rate over the past three months, according to the Economic Policy Institute. With inflation running around 2 percent, this means the average American is falling behind, his standard of living dropping. As the Brooking Institution figures things, between October 2010 and February 2011, real hourly and weekly earnings in the private sector fell 1.1 percent.

Even Goolsbee knows those numbers won’t improve a whole lot unless the unemployment rate moves sharply lower. Yet the official White House economic forecast has unemployment averaging 8.6 percent in 2012, not much below the current 8.8 percent rate. (The broader U-6 rate, which includes discouraged workers and part-timers who want full-time gigs, is a sickening 15.7 percent.) JPMorgan economist Michael Feroli thinks a combination of so-so economic growth, a vast pool of unemployed, higher energy prices and the expiration of the 2011 payroll tax cuts means income growth will likely remain “tepid” going forward.

So for now, consider Obama a favorite to win a second term — most presidential incumbents do — but only by the narrowest of margins. If incomes stay stagnant — and if Republicans can nominate someone with a strong, passionate and specific pro-growth economic message — Election Night 2012 could be a long one.

21 comments

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Obama must go. The country is going to hell in a handbag and Obama is using smoke and mirrors to play up his election. Vacate the WH by giving this unqualified pretender his walking papers and let him join Obamas own unemployment lines. People are really beginning to see how their standard of living is decreasing under this egregious leadership. Forced socialist healthcare; union pandering; corruption and leading us into another war does not endear us to this joker. He has garnered more disrespect for the office of the president than any other occupant in the WH. Many would prefer Carter by todays standards. Nope, the man must go and only the voter can do that. Boycott any financial support of this guy and the dumbocrat’s

Posted by minuteman | Report as abusive

The money quote is the U-6 number and the fact that an unprecedented number of people are giving up looking for a job. As the pool of eligible workers shrinks , the un-employment rate among the remaining pool looks better.

As far as Obama, his policies have held back growth and employment….but sloganeering will continue

check out video which attempts to explain politics in the age of Obama

http://www.youtube.com/watch?v=vTww7l9vL 0o

Posted by cmdr_riker | Report as abusive

One can only hope and pray.

Posted by anne3 | Report as abusive

“Every single poll from day 1 has said jobs/economy is the top priority when that option is offered. There isn’t a single poll that says or has ever said anything different.”

That must explain why House Republicans, since their takeover, have been obsessed with Abortion, Overturning Healthcare Reform, and Abolishing NPR. Maybe they are confused and thought it was about CUTTING jobs.

Posted by nooneimportant7 | Report as abusive

“Every single poll from day 1 has said jobs/economy is the top priority when that option is offered. There isn’t a single poll that says or has ever said anything different.”

This must explain why House Republicans have been focussed on Abortion, Overturning Healthcare Reform, and Abolishing NPR.

Posted by nooneimportant7 | Report as abusive

If only our wealthy citizens and companies were not subjected to such high and ruinous taxes! We need to cut them some more and provide more big business credits and loopholes!

It is true that 2/3s or more of companies pay no income tax (e.g. GE) and that folks like Warren Buffet pay a lower percentage of their income for their total tax bill than his secretary. Still, we need to cut his and other rich folks taxes even more so that they will create jobs for us mopes who do pay such a high percentage of our income on our total tax bill. Don’t you understand?

Posted by bearperney | Report as abusive

And what Republican clown should replace him?

Posted by dcrimso | Report as abusive

Governing this country should really be pretty simple. Uphold the Constitution, uphold the law and protect the country. That’s really the extent that we should govern (at least that’s what our founders thought).

Unfortunately, along the way, the Progressive mentality decided that social engineering was a good idea and the whole system went to hell in a hand basket. And BHO is the pinnacle of that way of thinking.

The bad news is that ideology has only harmed our Republic. The good news is that Americans have started to figure it all out. Other than those who share the Progressive and radical Left’s agenda (they seem to have common goals), most folks understand that something stinks in Obama-Land.

Obama failed to accomplish the things people wanted from him; and he succeeded in accomplishing the things people didn’t want. I simply can’t fathom how he will carry the independents this time around.

Posted by Cogs | Report as abusive

Very basic fact which the “progressives” fail to understand. Nothing is produced without work. In fact it takes work to just stay even. Unless the U.S. is producing internationally marketable goods and service, unless we have a decent balance of trade, we will sink the country. There would be much employment if government simply got out to the way. Only interfere if there is a real problem. The purpose for government agencies like OSHA is not to help people operate safely but to fine. Same for most agencies. They can’t prove they have value unless they fine for anything they can find no matter how petty. Can’t beat capitalism for producing the best goods at the lowest price as long as the playing field is even. The age of Crony Capitalism is taking its toll. And then, we cannot come to grips that we have government doing things that it cannot afford to do. Health Care for all? Ok, do it if we have a flourishing economy that can afford it. Don’t dump mandates on business in the middle of an economic crash. Does not work.

Posted by NoLawyers | Report as abusive

Governing this country should really be pretty simple. Uphold the Constitution, uphold the law and protect the country. That’s really the extent that we should govern (at least that’s what our founders thought).

Unfortunately, along the way, the Progressive mentality decided that social engineering was a good idea and the whole system went to hell in a hand basket. And BHO is the pinnacle of that way of thinking.

The bad news is that ideology has only harmed our Republic. The good news is that Americans have started to figure it all out. Other than those who share the Progressive and radical Left’s agenda (they seem to have common goals), most folks understand that something stinks in Obama-Land.

Obama failed to accomplish the things people wanted from him; and he succeeded in accomplishing the things people didn’t want. I simply can’t fathom how he will carry the independents this time around.

Posted by Cogs | Report as abusive

Any Republican clown will do just fine. Speaking of clowns, even Trump is available!

Posted by RPUPTON | Report as abusive

I hope this guy is right. I fear he is not. Americans are getting squeezed between stagnant incomes and an inflation rate on every day items that’s intolerable. Those who say there is no inflation apparently don’t drive a car, drink diet pepsi or have rear ends to wipe. Maybe computers are getting cheaper, but what’s the point? Sky-rocketing commodity prices are driving Egyptians, Syrians, and Libyans to the streets. Unless that happens here, we’ll be stuck with another 4 years of president doofus-head.

Posted by retired_sandman | Report as abusive

Wow – I can’t believ the number of absolutely clueless remarks from what are utterly gutless Americans. GUTLESS!

You’re gutless because you are throwing stones at a president for not being able to fully and quickly restore an economy that your heroes trashed while battling the same morons that drobe the car off the cliff.

You’re gutless because you stood by during the early 80′s while millions of jobs were shipped overseas – but didn’t have the guts to stand up and demand that the field overseas be level as far as pollution control and basic human rights were concerned.

Or – were you too lazy to do your duty to pay attention while the economy was twice gutted under Reagan and Bush 1 – and then again by Jr. GUTLESS

TOO GUTLESS to yell when you are being bamboozled and raped every inch of the way by people you let play you like toys.

Not only that you’re obviously pretty weak of mind too. I bet you people have never stud the economic history YOURSELVES – listening to some hack does not qualify.

Why do you think Buffet and Gates and other super rich are scowling at you? Because they know they are NOT paying enough – and wish the government would up the taxes on the rich – but you keep asking to take in the rear – even though they repeat they would not object to tax increases.

I bet Gates and Buffet and Ted Turner and others know a boatload more about economics than you.

Quit being gutless – you believe in all the phony scare crap that you will hurt your grandkids – but let’s face it – you’re molesting your own kids and raping them thoroughly as the GOP keeps tricking you into incredible nonsense.

Posted by tpartier | Report as abusive

Fortunately for Obama, he has the Republican House to run against. They are providing an even better target than the Gingrich house. In the middle of the worst post WWII recession, they are forcing massive cuts and acting silly, ideological and heartless. The state budget cuts and anti-labor laws will help him also-plenty to blame on Republicans. The polls are swinging against them. See: http://roominhouseblues.blogspot.com/201 1/03/swing-states-swinging-against-meat- axe.html

Posted by JosephDrake | Report as abusive

I really expected more from a journalist as respected as James Pehokoukis than this naked partisan drivel. So after the last 3 years of being told by Conservatives that the American worker isn’t competitive and makes too much to be be competitive in the zero margin global marketplace; that we must be willing to accept pay cuts; that corporate profits due to stagnant or falling wages were a good thing, now he says it shows Obama is a failure. Nevermind that wages were stagnant or falling the entire GWB admin(well except for those WHO WORKED FOR THE GOVERNMENT LIKE DEFENSE CONTRACTORS WHO WORK FOR THE GOVERNMENT). It’s Obama’s fault.

Posted by jswarren | Report as abusive

Telling a lie over and over does not make the truth. The fact is that the Republican party is diminishing the whole fabric of middle class…eliminating schools, eliminating unions, forcing women to government control over their reproductive systems, and worshiping the God of Trickle Down Economics…it is all a damned lie….One of them blats it out the rest swear to its Gospel truth. The whole reason the economy is failing is that the top 1% control all.

Posted by tudognight | Report as abusive

[...] Me The Money From Reuters via Glenn Reynolds at Instapundit; The Obama 2012 presidential campaign, which has now officially [...]

[...] Incomes, Not Jobs, Could Sink Obama Re-Election – Reuters Share This On: [...]

“The fact is that the Republican party is diminishing the whole fabric of middle class…”

No. Not a “fact”. Not even close.

Government overspends and guarantees higher taxes, primarily penalizing the “wealthy”, i.e., S-Corp and sole proprietorship business owners – who employ most of the workforce. The result is low employment and, with it, a flagging economy. This process has been in effect since the Democrat Congress caused the downturn in the economy in late ’07.

Personal disposable income increased during ’01-’07 (http://tinyurl.com/3lmyene); the federal deficit shrank from ’03 through ’07 – thanks to Republican policies. All that changed with the tax-and-spend Congress beginning in ’07, and has only gotten worse since.

Posted by AGoyAndHisBlog | Report as abusive

Obama, Reid, and Pelosi have been an absolute disaster for America in every way. Obama’s base has dwindled down to union thugs, those kept dependent on the government, and the Marxist/Socialist radicals who want to destroy capitalism. I would include the rabid environmentalists in that last group.

Posted by SamAdams25 | Report as abusive

[...] It’s not jobs, says James Pethokoukis at Reuters. It’s incomes. While jobs are growing, incomes are not. And income growth — or the lack of it — political scientists agree, is the economic variable with the most impact on national elections. Strong growth in real disposable personal income led to huge victories for Reagan in 1984, Richard Nixon in 1972 and Lyndon Johnson in 1964. Weak or negative growth doomed Jimmy Carter in 1980, George Bush in 1992 and John McCain in 2008. [...]

Not all incomes are falling. The top one percent are getting much richer and corporations like G.E. are getting away with paying little or no taxes while the middle class gets hit harder each year.
PACs give millions to the politicians who reward them with goodies while the public stupidly blames the government instead of the greedheads who are buying it. The solution? According to Republicans, reduce regulation and give the corporations more power. According to Democrats, sit back and complain about it.
We need more choice.

Posted by Boguseconomist | Report as abusive

[...] has employers of all types attempting to do more with less, and as some bloggers point out, this discrepancy between a growing economy and stagnating income has consequences that extend all the way to the desk of President Obama, and his campaign [...]

Republicans are the biggest users of “smoke and mirrors” (i.e. pure BS). Extending the upper Bush cuts has been their only accomplishment (using the “trickle down” excuse as a reason), and they’ve offered nothing that will contribute to job or income growth – corporate profits peaked (since 1950) last quarter while so many were out of work. The only good thing is Republicans will also be affected by spending cuts – bad thing is they’ll blame it on someone else. Smart Republicans know they benefited from stimulus money (window and furnace/AC installers from tax credits), as well as governors who had to meet state budgets – now that fed subsidy has dried up, and Republicans can’t give to red states only, the truth about budget management will become known. I challenge Republicans to come up with a better plan to help the country, but most won’t because it will reveal sacrifice that all will have to make – it’s much easier to criticize others than fix a problem.

Posted by chris87654 | Report as abusive

I work at a very big software company that all of you have heard of — there is only one reason why this company hires Indian IT firms — PRICE!!!!! In India and China, there is plenty of SLAVE LABOR and the U.S. Govt. has decided to equalize U.S. JOBS and Salaries with these SLAVE LABOR conditions to do one thing: support a CEO to average worker pay gap of 400X (see below.) Don’t listen to anything else that the companies say, it’s about price. We could easily train Americans to develop these skills on the job in about three months. Price includes training and having to deal with workers who require health benefits and everything else that a person working should get.

There’s a big difference from the old days when American people cared about one another and nowadays where greed rules the day: while corporations have robbed pension funds that were committed to, banks have falsely appraised real estate for the past 10 years and aren’t held to account for the fraud when the borrowers are held to the falsely valued loans, and executives get paid 400 TIMES the average worker — see the following article:(http://www.opednews.com/article s/The-Wide-Divide–You-Are-B-by-Steve-Ell iott-080616-912.html), Americans continue to vote for the creators of these schemes: Republican schemers. It’s crazy how you are shooting yourself in the feet, ladies and gentlemen. Please get a clue. Yeah, Obama is not the best and is having a hard time, but if you think cutting more decent jobs is the answer, watch out because I can replace ANY U.S. Worker, and I mean any, (skilled or not, doctor, lawyer, IT, CEO, McDonald’s person, whatever) with a Chinese or Indian worker who will cost 5% of your total salary — want to compete with that? And I mean ANY job.

Posted by NoMoreUSDream | Report as abusive

[...] Incomes, not jobs, could sink Obama re-election [...]

[...] with white voters; Peter Kirsanow says his approval among black Americans is declining as well. James Pethokoukis explains the importance of income growth to Obama's re-election (via Nyhan). Marc Ambinders finds five [...]