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May 9, 2011, 2:08 p.m.

A cn|2 poll; con­duc­ted 10/4-6 by Braun Re­search; sur­veyed 826 LVs; mar­gin of er­ror +/- 3.4% (re­lease, 10/8).

Obama As POTUS

- All Men Wom 9/1 8/18 7/21 Ap­prove 37% 35% 39% 43% 40% 41% Dis­ap­prove 60 64 57 54 58 56

Which Party Would You Rather See In Charge Of Con­gress After The Nov. Elec­tion?

- All Men Wom 9/1 GOP­ers 47% 52% 43% 45% Dems 37 35 40 37 Neither 6 7 5 9 Un­dec 9 7 11 9

(For more from this poll, please see today’s KY SEN story.)

The cur­rent spike in gas­ol­ine prices and the flap over the Obama ad­min­is­tra­tion’s pro­posed re­quire­ment that re­li­giously af­fil­i­ated in­sti­tu­tions provide their em­ploy­ees health in­sur­ance cov­er­ing con­tra­cep­tion are use­ful re­mind­ers that eco­nom­ics and polit­ics are both dy­nam­ic, not stat­ic. It’s al­ways risky to pro­ject that the status quo will hold, par­tic­u­larly when an elec­tion is more than eight months away.

There’s no ques­tion that the eco­nom­ic num­bers over the past five months have been sig­ni­fic­antly bet­ter than they were in the first nine months of 2011. They’ve ris­en from a level at which any pres­id­ent would have a dif­fi­cult time get­ting reelec­ted to one that sug­gests this might be a com­pet­it­ive race that could go either way. But those num­bers are in the ab­stract. The 30-cent surge in gas­ol­ine prices in re­cent months is largely at­trib­ut­able to polit­ic­al in­stabil­ity in Ir­an and else­where in the Middle East, and it is something that av­er­age voters can see, feel, touch, and hate. Don’t be sur­prised to see an­ger start bub­bling up any­time now.

It’s any­one’s guess where the eco­nomy, un­em­ploy­ment, and gas prices will be this sum­mer. We should be mind­ful of the fluid­ity of eco­nom­ic news, good or bad. Things (oth­er than gas­ol­ine prices) look bet­ter now than they did four months ago, but what will they look like four or eight months from now? Will Europe fall in­to a re­ces­sion? Will there be a col­lapse of ma­jor fin­an­cial in­sti­tu­tions in the euro­zone? These are very big ques­tions that can­not be answered now.

Even the smartest eco­nom­ists dis­agree about the eco­nom­ic out­look.

Sim­il­arly, con­tro­ver­sies can pop up lit­er­ally overnight, al­ter­ing how we per­ceive the polit­ic­al and eco­nom­ic ter­rain. Pres­id­ent Obama’s fum­bling of the con­tra­cep­tion is­sue last week — end­ing in a com­prom­ise that should have been his ad­min­is­tra­tion’s start­ing po­s­i­tion — stole head­lines from very pro-mis­ing job news. The Bur­eau of Labor Stat­ist­ics re­por­ted a drop in ini­tial un­em­ploy­ment claims, and its Job Open­ings and Labor Turnover Study sur­vey showed there were 3.4 mil­lion job open­ings na­tion­wide on the last day of Decem­ber 2011, com­pared with 3.1 mil­lion on the last day of Novem­ber. These great stor­ies for the White House got stepped on by the con­tra­cep­tion fight.

Even the smartest eco­nom­ists in the coun­try dis­agree about the U.S. eco­nom­ic out­look. In Feb­ru­ary’s Blue Chip Eco­nom­ic In­dic­at­ors sur­vey of 56 top eco­nom­ists, the con­sensus fore­cast for 2012 was that gross do­mest­ic product would grow at 2.1 per­cent in the first quarter (down from 2.8 per­cent in the fourth quarter of 2011), then edge up to 2.2 per­cent in the second quarter, 2.4 per­cent in the third, and 2.6 per­cent in the fourth. In terms of un­em­ploy­ment, the con­sensus pro­jec­tion was an 8.4 per­cent av­er­age rate for the first quarter (0.1 per­cent above Janu­ary’s rate), then 8.3 per­cent in the second quarter, 8.2 per­cent in the third, and 8.1 per­cent in the fourth.

In my view, if the over­all un­em­ploy­ment num­ber is 8.1 per­cent in the fourth quarter of this year, Obama is very likely to get reelec­ted. Al­though not at the 7.2 per­cent level that Pres­id­ent Re­agan had in Novem­ber 1984, down from 10.8 per­cent two years earli­er, it would likely be enough to win — al­beit, not in the 49-state land­slide fash­ion Re­agan en­joyed.

One of the use­ful as­pects of the Blue Chip study is that it av­er­ages the 10 most op­tim­ist­ic pro­jec­tions as well as the 10 most pess­im­ist­ic ones. The op­tim­ists pro­ject un­em­ploy­ment in the first quarter of this year to stand at 8.2 per­cent, then to fall suc­cess­ively to 8.1 per­cent, 7.9 per­cent, and 7.7 per­cent in the oth­er three quar­ters — get­ting closer to Re­agan-land un­em­ploy­ment num­bers.

However, the pess­im­ists fore­see un­em­ploy­ment rising to and hold­ing at 8.6 per­cent in the first and second quar­ters, and stand­ing at 8.5 per­cent in the third and fourth — much more in jump-ball ter­rit­ory than “ad­vant­age Obama.” The dif­fer­ence is that the pess­im­ists are pro­ject­ing GDP growth to be un­der 2 per­cent for the en­tire year, while the op­tim­ists are fore­cast­ing growth of 3 per­cent or high­er for the second, third, and fourth quar­ters. The dif­fer­ence in the eco­nom­ic and the polit­ic­al tra­ject­or­ies would be huge.

We don’t know where the eco­nomy is go­ing or what cam­paign de­vel­op­ments will oc­cur. All we know is that things are dif­fer­ent than they were four months ago. Obama’s job-ap­prov­al rat­ing of 47 per­cent last week is high­er than he has had since last sum­mer, but there is no guar­an­tee it will hold for the next month, let alone the next eight. People jump­ing to con­clu­sions about this race do so at their per­il.

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