The 2008 presidential campaign is entering a critical phase. Yeah, political analysts say that all the time. But right now, it happens to be true. The bounces have finished bouncing, and this race has returned to even.

Republican presidential nominee John McCain's post-convention momentum has run out of steam. In fact, no one seems to have momentum for the time being.

It's pretty clear that Democratic presidential nominee Barack Obama, who had a narrow but steady lead in most polls through the summer, was unable to close the sale at his convention, despite the impressiveness of the Denver gathering. Reservations about the first-term senator persist.

But events of the past few days may -- may -- diminish McCain's ability to take advantage of the resistance to Obama among some older and working-class white voters. A 504-point, single-day plunge in the Dow Jones industrial average is enough to spook most people, particularly those who were already pessimistic about the nation's direction. McCain's statement on Monday morning, after the market opened 300 points down -- "The fundamentals of our economy are strong" -- could prove to be a devastating faux pas, particularly if linked with the dozen other times he used the same phrase earlier this year. His assessment simply does not correspond with what people think about the economy.

McCain has been behind the curve on economic issues for the last year. He is an undeniably intelligent and well-informed guy, but he acts as if he has tunnel vision, focusing on the war in Iraq and only a few other foreign-policy topics. This tendency seems to have put him dangerously out of touch with other issues that also happen to be important.

Of course, during the primary season McCain wasn't the only Republican presidential candidate paying little heed to the nation's economic problems. During a GOP debate in hard-pressed Michigan, it was mind-boggling that none of the party's contenders made an attempt to acknowledge voters' -- especially Michigan voters' -- economic anxieties. You would have thought the candidates were in Hawaii or Alaska or Arizona or Florida.

Concurrent with McCain's gaffe on the economy, the heat on his running mate, Alaska Gov. Sarah Palin, is being turned up. Counting the investigative reporters and the Democratic opposition researchers, plus the GOP operatives trying to keep up with what the first two groups are uncovering, there probably isn't a vacant hotel room in all of Alaska.

The stories now flooding out of that state are painting a considerably less flattering picture of Palin than the one that she and McCain have presented. And as the contest proceeds, the McCain campaign will have an increasingly hard time controlling access to her and tamping down unfavorable coverage.

The combination of worsening economic woes (fueling the "time for change" dynamic that was already pretty strong), McCain's misstep on the state of the economy, and revisions to the Palin biographical narrative threatens to shift the direction of this race. A Republican today might well feel like the proverbial long-tailed cat in a room full of rocking chairs.

Democrats, however, have to ask themselves why this race isn't already over. In other words, why, with virtually every fundamental factor working their way, are they still locked in a very tight race? During the knock-down, drag-out fight for the Democratic nomination, Hillary Rodham Clinton all but said that Obama was unelectable. And, in reality, the Democrats' nomination of Obama may not be totally dissimilar to McCain's pick of Palin: It will ultimately seem either brilliant or insane. If Obama wins, the choice will look courageous and inspirational. If he loses, it will look foolhardy and naive.

In the next few days, polls should reflect Obama's improved circumstances by showing him pulling ahead by at least a few points. If he doesn't gain any traction, the next thing you hear might be Democrats muttering to themselves whether they have blown yet another presidential election.

This race is likely to remain close for the duration. But if the events of the past few days don't move Obama up, what would?

This article appeared in the Saturday, September 20, 2008 edition of National Journal.

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