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OFF TO THE RACES

Close-Up Time

The presidential race has much to do with whether voters zoom in tight on the direction of the economy or take a wider view.

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Obama: Changing lenses(Rich Pedroncelli/AP)

As some of us predicted, the Supreme Court’s decision on the Affordable Care Act had little impact on the presidential campaign. Those ardently favoring or opposing President Obama’s health care law made up their minds long ago. There was little the Court could do that would fundamentally alter public attitudes.

Barring some cataclysmic event, the dominant issue in this election will be the economy—and how it is viewed, which lens is used, is extremely important. A close-up, telephoto lens keeping the focus and eye trained squarely on Obama and the state—and more importantly, the direction—of the economy would likely present a picture that Obama and Democrats don’t want.

 

But at this juncture, just over 100 days before the election, a wide-angle lens is in place, also including in the view a rather unflattering picture of Mitt Romney and his career at Bain Capital. Even without asking any of these folks if they actually read Thomas Friedman’s The World Is Flat and acknowledging hyperbole in the attacks on Romney, it’s hard to deny that they have taken the spotlight off Obama and the economy and put it on Romney and Bain. That has muddied the waters, which for the Obama campaign is a good thing.

An important question is whether the lens will stay in wide-angle mode or will adjust for more of a close-up in the coming two weeks. On Friday, the Commerce Department will release its first estimate of economic growth for the second quarter of this year, and it isn’t likely to be pretty. Gross domestic product grew by 3 percentage points in the fourth quarter of last year, but slowed down to 1.9 percentage points in the first quarter of this year. Estimates of second-quarter growth have been slashed in recent weeks; most estimates predict that growth will be down to about 1.5 percent, half of the growth rate of the last quarter of 2011, with some predicting even slower growth of GDP, possibly as low as 1.2 or 1.3 percent.

The following Friday morning, Aug. 3, will bring the July unemployment and personal-income numbers, the former being the more closely watched of the two. A very good case can be made that underemployment, which isn’t accounted for in the closely followed “U-3” unemployment rate, is just as much a problem. Economic analysts will look at the “U-6” rate,  which also includes those working part-time but seeking full-time work and those who for now have simply given up looking altogether.

 

Another pair of numbers worth watching are the labor-participation rate, which indicates the percentage of the working-age population (age 16-64) who are either employed or looking for employment, and the employment-population ratio, which compares the number of employed people with the overall (non-institutionalized) civilian population. Looking at those two measurements gives a better, broader view of the employment picture. The personal-income rate—specifically, change in real personal disposable income—tells us how much people have coming in, after taxes and inflation, and is a good measure of people’s current financial situation.

With the world economy worsening; the powerhouse economies of China, India, and Brazil buying fewer U.S. goods and services; the economic and banking situation in the eurozone declining further; and with Washington seemingly headed for a fiscal cliff during the lame-duck session, this is a grim outlook. Gathered together, these dark clouds provide little incentive for business leaders to hire, expand, borrow, lend, or invest.

Now factor in the Olympics running from July 27 (the day the GDP numbers come out) to Aug. 12, as well as the announcement of the Republican vice presidential candidate, and you start to get a picture of this fight over lenses between the Obama and Romney camps and how large the stakes are.

The Gallup Organization reported on Monday that Obama completed his 14th quarter in office, ending July 20, with an approval rating of 45.9 percent, a poor showing but better than the 43.3 percent in his 13th quarter (roughly the first three months of this year) and the 41 percent in the 12th quarter.

 

Economic numbers have gotten worse, and yet his approval ratings have marginally improved. When you consider the bottoms hit by previous presidents—28 percent for George W. Bush, 29 percent for Jimmy Carter, 32 percent for George H.W Bush, and 37 percent each for Bill Clinton and Ronald Reagan —you come to appreciate (or not) how Obama has kept his numbers from plummeting as far as his five immediate predecessors.

This race is close, very likely uncertain to the very end. But for the next couple of weeks, see which side keeps the electorate’s attention during the Olympics.

This article appears in the July 24, 2012 edition of NJ Daily.

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