Pass the word: The great recession is over.
What, you haven't heard? Various economic gurus are talking about a strong third-quarter rebound, the Dow continues its upward creep toward 10,000, and a former Reagan economic whiz named Michael Muzza declares that America already has commenced a "moderately vigorous recovery."
But in terms of President Obama's political health, and the Democrats' prospects for success in the 2010 congressional races, upbeat macroeconomic statistics really don't mean squat. Voters won't believe that the economy has truly begun to rebound until they can see tangible evidence with their own eyes.
A recovery won't seem real until the vacant corner store has a new occupant and a "hiring now" sign on the glass; until the jobless spouse in the den is going out the door every morning with a new work bag; until it's a hassle once again to find a parking spot at the mall; until the price tag for fixing the porch seems doable, and the contractor who does the work is again swamped with other bids.
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Until such time as these things happen, Obama and the Democrats will be treading on thin ice in the long march to the 2010 elections. This might be arguably unfair — the economy went bad for a host of well-known reasons, and presidents are often at the mercy of economic trends beyond their control — but that's politics. Inevitably, those in charge are held accountable when times are tough. Or, more important, when times are perceived as tough, no matter what the graphs look like.
Presidential approval ratings tend to rise or fall in accordance with the jobless rate. Obama's have been no different; since last January, the drop in his thumbs-up rating has closely tracked the rise in the jobless rate. If the current jobless rate persists well into 2010 — and the Congressional Budget Office is predicting that next year's rate will average 10.2 percent — Obama may be hard-pressed to post decent numbers of his own.
Hart Research Associates, a Democratic polling firm, has just released a snapshot of the national mood: 61 percent of Americans say they are close to somebody whose hours or wages has been cut; 57 percent are close to someone who has been laid off; 44 percent of households have suffered either a layoff or a cutback in hours or wages. Most important, 85 percent of Americans say we're still in a recession.
Obama and the Democrats, seeking to defend their hefty congressional majorities, will argue that the key economic indicators are trending upward — and that may well be true. But among voters, there is typically a time lag between reality and perception.
There is no more vivid example than the misfortunes that befell the first President Bush back in 1992. Many of you may recall that we suffered a bad recession during Bush's term, notably in 1990. The top wonks decreed in March 1991 that the recession was officially over, and kept saying so all year long. In macro terms, they were probably right. But at street level, they were perceived as wrong — because the stores stayed empty and the jobless rate continued to rise.
It may be no different for Obama and the Democrats, barring any street-level evidence of economic recovery during the next 13 months. There certainly won't be any tangible progress on the health care front, because even if historic reforms are enacted, the key provisions aren't slated to kick in until 2013. So the big question, between now and November 2010, is whether Obama can successfully plead for patience until a recovery feels tangible and perceptions accordingly change.