Wednesday, January 12, 2011

President Obama's Re-Election Campaign

The Lehmann Letter (SM)

Tonight President Obama speaks to the nation from Tucson regarding the awful events of last weekend. Let us hope his words help heal and move the political discourse to a higher and calmer plane.

Meanwhile the business of politics rolls on. Today's Wall Street Journal carried an article by Jonathan Weisman and Laura Meckler entitled "Obama Begins Gearing Up Re-Election Bid:"

An historical view of the chart highlights the difficulty facing the president.

Consumer Confidence

(Click on chart to enlarge.)

Recessions shaded

Consumer confidence hovered at a low of 60 when Presidents Jimmy Carter and George H. W. Bush ran for re-election in 1980 and 1992. Both suffered defeat.

Contrast those outcomes with the good fortunes of Presidents Ronald Reagan and Bill Clinton when they stood for re-election in 1984 and 1996. Consumer confidence had popped back up to 100 and both men won easily.

Some observers point out that Presidents Reagan and Clinton suffered setbacks in the mid-term Congressional elections of 1982 and 1994. Yet those setbacks did not impair their re-election two years later. These observers draw on that experience to forecast that President Obama's 2010 mid-term congressional setback will not necessarily impede his re-election.

But the chart counsels caution. It shows us that Presidents Reagan and Clinton, and Pres. George W. Bush in 2004, won re-election handily with consumer confidence at a strong showing of 100. Consumer confidence now hovers slightly below 60. What are the chances it will pop back up to 100 in the next two years?

Recall that Presidents Reagan, Clinton and George W. Bush had the good fortune of an economy recovering sharply from recession. The economy snapped back for Pres. Reagan in 1984 when the Federal Reserve allowed interest rates to fall after the Fed successfully employed high interest rates to stop runaway inflation. President Clinton enjoyed the beginnings of the dot-com boom in his 1996 reelection bid. George W. Bush benefited in 2004 from the launch of the real-estate bubble.

All of these presidents won re-election when strong economies lifted consumer confidence. They were not responsible for their good fortune, yet they benefited from that good fortune. The economic outlook is not so rosy for President Obama. How likely is it that the economy and consumer confidence will show great strength in the next two years? So much depends on economic circumstances beyond the president's control.

The president has a tough row to hoe.

(The chart was taken from [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2011 Michael B. Lehmann

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